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Analysts: Export volumes will not increase this year

Employees at a factory.
Employees at a factory. Source: Raul Mee/ Estonian Forest and Wood Industries Association

Estonia's exports dropped significantly last year and analysts are not optimistic about the coming year due to neighboring countries' economic situations.

Last year, the export of Estonian goods decreased significantly, Statistics Estonia said on Friday.

Minerals fuels and oils saw the largest drop at 59 percent, while wood and metal industry sectors fell by 17 and 10 percent, respectively.

The drop in mineral products is due to the drop in Russian oil transit, SEB analyst Mihkel Nestor told Friday's "Aktuaalne kaamera". 

"They were blended and sold on the world market. A huge volume of activity in euro terms. It is likely only a very small part actually stayed in the Estonian economy," he said.

However, the export of Estonia's wooden products is at a low point. Timber components producer Barrus, in Võru, south Estonia, is currently operating at 70 percent capacity.

"Traditional target markets in Scandinavia, in particular Sweden, Finland, and to a lesser extent Norway and Denmark, are under very strong pressure. And there's still a currency turmoil in the air there, with the Swedish krona relatively cheap, so as far as I know, nobody's doing very well," said Barruse board member Martti Kork. "We're at the bottom of the hole, but there are no signs of improvement, although [there is] some hope that seasonal volumes might increase somewhat towards spring. But there is no macro number that has improved."

Nestor said a big part of the problem is the construction market.

"Almost half, if not a little bit more, of the stuff exported was somehow related to the construction and real estate market. And since Swedish construction volumes fell by something like 60 percent last year, there is simply no demand for it," he said.

LHV Analyst Triinu Tapver believes Estonian export volumes will not improve this year.

"If they don't build houses in Finland or Sweden, they don't want Estonian roofs and doors. Since it is bad there at the moment, I tend to think that our exports will be bad for a year. Although there are small signs of improvement in society, people feel a little more secure than they did before, but still...," she told AK.

When the Nordic countries' economies improve, this will help to lift Estonian exports, Nestor said.

"The output of the Estonian manufacturing industry has increased over the last two months /.../ The recovery in the Swedish construction property market – that's not happening this year. But if there is still hope that interest rates will start to come down, it will give a little bit of breathing space to the economy everywhere," he said.


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Editor: Marko Tooming, Helen Wright

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