Who are poorer than Estonians?

The level of relative poverty in Estonia is 19.5 pct according to the data of Statistics Estonia in 2006, but in a number of developed countries the level of relative poverty is even higher, aripaev.ee quotes Russian business newspaper Delovõje Vedomosti.

There are two types of poverty – relative poverty, determined by comparing the incomes of households with the medium level of society, and absolute poverty, determined by comparing the income level of households to standards set for the state (and year) by experts.

Relative poverty is determined like this: 6000 people are questioned and their equivalent net income during a certain period of time is learned (for example, provider is 1; another adult family member is 0.5, children 0.3).

All incomes are listed from lowest to highest and the medium is found. Then 60 pct of that medium is calculated, and the result is the limit of poverty. People whose income is below that limit live in relative poverty.
 
Despite the fact that the indicator of poverty increased a bit in Estonia when compared to the previous year, we aren’t much different from the medium of Europe. According to the data of Eurostat, in 2006 the level of relative poverty in EU’s 25 member states was 16 pct. At the same level with Estonia – 19 pct – were the United Kingdom, Poland, and Rumania. In Italy, Lithuania, and Spain 20 pct of people lived in relative poverty, in Greece 21 pct, in Latvia 23 pct. The situation is best in Czech, Netherlands, and Iceland, where the rate of relative poverty is 10 pct.

According to OECD’s report for 2006, the rate of relative poverty in USA and Japan is also low, appropriately 13.7 pct and 13.5 pct. According to OECD, it’s caused by fixed-term contracts and low wages.

Read more: BBN

Retail sales decreased during the year

According to Statistics Estonia, in June the retail sales of goods of retail trade enterprises were 4.8 billion kroons — in constant prices 7% less than a year ago.

In grocery stores the retail sales decreased 3% compared with June of the previous year. The decrease in sales was essentially influenced by a rapid growth in the prices of food products. The retail sales in stores selling manufactured goods decreased 12% compared with the same period of the previous year. Compared to June of the previous year, the retail sales of goods decreased in most economic activities except mail order sale and retail sales of pharmaceutical goods and cosmetics. The retail sales of other specialized stores, such as stores selling computers and their accessories, photographic supplies, sports, fishing and hiking equipment, games and toys etc, decreased most (17%).

In the first six months, the retail sales of goods in retail trade enterprises decreased 2% in constant prices compared to the same period in the previous year.

Compared to May 2008, the retail sales of goods in retail trade enterprises decreased by one per cent in constant prices.

In June, the net sales of retail trade enterprises were 5.6 billion kroons, out of which the retail sales of goods accounted for 85%. Compared to June of the previous year, net sales increased by one per cent in current prices. But compared to the previous month, this indicator decreased by one per cent.

Retail sales volume index of retail trade enterprises and its trend,
January 2000 – June 2008 (corresponding month of previous year = 100)

Source: Statistics Estonia

In June the industrial production was smaller than a year ago

According to Statistics Estonia, in June 2008 industrial production increased compared to May but decreased compared to June of the previous year.

In June, the seasonally adjusted industrial production of Estonia increased 2% compared to May.

In comparison with June of the previous year, industrial production decreased 5%. The decrease in production was essentially affected by a continuous decrease in electricity production — compared to June of the previous year, the production of electricity decreased 28%. As before, the decrease in electricity production was caused by a partial replacement of own production with the imports of electricity — in June nearly one third of consumed electricity was imported. The production of heat increased 2% compared to June of the previous year.

In manufacturing, production decreased 2%. The main reason for this was the decrease in orders. According to the information of Estonian Institute of Economic Research, more than half of enterprises mentioned insufficient demand as the key factor hindering the growth. The growth in production is mainly hampered by the decrease in the internal market demand. In June compared to the same period of the previous year, the industrial domestic sales of enterprises decreased 5%, however, industrial export sales increased 3%. The decrease in the production of manufacturing was mainly influenced by the production of food, wood and building materials. The decrease in the manufacturing of food is continually affected by price increase and by the decrease in consumption resulting from it. In June, the producer prices of food products rose more than 18% compared to June of the previous year, in the manufacturing of milk products the increase was 28%. Nevertheless, the producer prices of milk products fell compared to May. Due to the decrease in construction volumes, the production of building materials is continually in a declining trend — the production of building materials decreased 24% compared to the previous year. The downward trend continued in the manufacturing of wood, the production of furniture also decreased.

In June, production increased primarily in the export-oriented branches of industry — in the manufacture of metal products, chemical products, electrical machinery, radio and communication equipment and apparatus.

The volume index and trend of production in manufacturing, January 1998 – June 2008
(2000 = 100)

 

 

 

Change in volume index of industrial producti on, June 2008
(percentage)

Economic activity	Change compared to previous month according to seasonally adjusted dataa	Change compared to corresponding month of previous year
		according to unadjusted data	according to working-day adjusted datab
TOTAL	1.6	-9.5	-4.7
Energy production	-3.5	-23.4	-23.4
Mining	-6.3	-18.2	-13.4
Manufacturing	2.8	-7.4	-2.2
manufacture of food products and beverages	2.6	-6.9	-3.7
manufacture of wood and wood products	-4.6	-29.1	-25.0
manufacture of fabricated metal products	15.3	24.5	33.8
manufacture of electrical machinery	6.2	1.3	8.7
manufacture of building materials	1.1	-27.3	-24.0
manufacture of chemicals and chemical products	-7.0	-1.2	3.4
manufacture of furniture; manufacturing not elsewhere classified	-2.7	-24.3	-18.7
manufacture of radio, television and communication equipment and apparatus	19.7	12.1	17.2
manufacture of textiles	-1.5	-12.1	-6.0

^a In case of the seasonally adjusted volume index, the impact of the differing numbers of working days in a month and seasonally recurring factors has been eliminated. It is calculated only in comparison with the previous period.
^b In case of the working-day adjusted volume index, the impact of the differing number of working days in a month has been eliminated. It is calculated only in comparison with the corresponding period of the previous year.

Source: Statistics Estonia

Estonian farmers don’t like the compulsory insurance

According to the Estonian Insurance Association, the agricultural insurance support, which was forced through by European Commission, could only work in case of validating the compulsory insurance for farmers.

This way it would be bearable for the insurance companies to handle such activities, Andres Piirsalu, the member of the management board of Estonian Insurance Association, told Äripäev.

The aim of the new support is to attempt the farmers to insure the arable crops as the state promised to cover up to 80 pct of the insurance expenses. This seems reasonable but none of the insurance companies doesn’t insure arable crop in Estonia.

Piirsalu explained that the associations are not interested in such insurance type because it is not economically profitable.

Read more: BBN

Food basket more expensive in Tallinn than in New York

Newyorkers have to pay less for the chicken filet, eggs, cheese, orange juice and other food products than Tallinners, the price comparison shows.

According to Statistics Estonia, minimum gross wage in Estonia amounts EUR 278 (EEK 4,348), in US EUR 696 (EEK 10,855), SL Õhtuleht mediates Ilta-Sanomat.

The prices in Tallinn are also beaten by the prices in Finland even though the prices of food products have increased there 14 pct y-o-y. Five years ago, the prices of food product in Estonia were 65 pct cheaper than in Finland.

According to Eurostat, the cheapest food basket is in Macedonia and Bulgaria, the most expensive in Denmark.

Source: BBN

Entrepreneurs coming short of working capital

Within the first six months of the current year, entrepreneurs have borrowed 328 million EEK from banks using KredEx loan guarantee. 209 guarantee applications have been made, of which 167 have turned into agreements.

KredEx guarantee is mostly used for obtaining investment loans from banks. Investment loans constitute 51% of the amount of guarantees issued within six months, followed by guarantees of overdrafts, working capital loan, bank guarantee and leasing. It is noteworthy that, compared to previous year, weight of investment loans has diminished, but the weight of overdrafts and working capital loans has increased.

According to Mr Andrus Treier, Kredex manager, cautiousness of entrepreneurs on making investment decisions indicates a lack of confidence about the future and, therefore, they are not willing to take excessive risks. “So far, a bigger weight of working capital loan guarantees indicates a larger necessity to finance current costs.” “A more conservative financial market is definitively influencing investment decisions of entrepreneurs. Compared to previous years, loan interests have significantly increased and financers have become more conservative in taking collaterals and evaluating their values. Above all, changes in assessment of immovables can be notified,“ Treier added.

 KredEx guarantee is mostly used by microenterprises with 9 employees – 64% of the amount of guarantees issued within first half of the year. Regionally, enterprises in Tallinn and Harju County are the most active guarantee applicants, to whom 59% of the amount of surety-provided loans and guarantees for bank guarantees has been issued. With the surety-provided loans within the period of January until June of 2008, according to enterprises‘ estimate, 665 additional working places will be established.

Since 2001, 1149 small and medium-sized enterprises have invested 3.7 billion EEK and ca 5800 new working places have been created using KredEx guarantee. Speaking about fields of activities, most of loan guarantees have been issued to production-related enterprises, of which the biggest part consists of timber and metal industry, followed by enterprises offering catering and business services. Also, guarantees for technical guarantee issued for building companies have had noteworthy weight within the first half of the year.

KredEx additional guarantee is meant for small and medium-sized enterprises who are about to begin their activities or lack sufficient collateral for obtaining loan from bank.

KredEx guarantees to bank up to 75% small and medium-sized enterprises‘ investment loan, working capital loan and bank guarantee. Leasing transactions will be surety-provided by KredEx for up to 40% of unpaid redemption price of leasing assets. Entrepreneurs belonging to the guarantee target group are operating in all kinds of activity areas, excl. agriculture, fishery, weapon and tobacco industry and public and voluntary sector. Likewise, no real estate development, retail and wholesale trade loans for financing working capital, and loans for obtaining means of transport of enterprises providing road transport services will be supported.

Source: kredex.ee

Cross-border energy flows up considerably in the 2nd Q

According to OÜ Põhivõrk (Main Grid), a subsidiary of the Eesti Energia (Estonian Electricity) power utility, the amounts of electricity transferred within the country stayed at the previous year’s level in Q2 this year, but cross-border energy flows increased considerably.
In Q2 this year 1,701 gigawatt-hours of electricity was transferred domestically in the main grid. Compared with the same period last year the volume remained practically unchanged, Põhivõrk said.
Cross-border energy flows, that is export, import and transit energy totalled 1,178 gigawatt-hours, 461 gigawatt-hours more than in the same period last year.
Of the energy directed into the power grid nearly 0.4 percent or 10.2 gigawatt hours was produced from renewable energy sources. Of this 8.3 gigawatt-hours was wind energy and 1.8 gigawatt-hours hydroelectric or waste energy.

Source: Estonian Review

Global Property Guide compares Estonian real estate to other markets

http://www.globalpropertyguide.com/Europe/Estonia

Estonia leads the House Price Changes table, 5 Yrs (%) – Estonia Compared to Continent acording to
http://www.globalpropertyguide.com/Europe/Estonia/price-change-5-years

Baltic ports compete over the Russian transit

Due to the Russian economic growth and increasing transit with EU, the container shipment in the Blatic region will grow several times. Latvia already is preparing for the increasing cargo volumes, Estonia is developing transit collaboration with China. 

Even though Russia is strongly trying to develop its ports, the Baltic ports have an important role as cargo ports since the ports of Primorski and St. Petersburg will not be able to handle such cargo volumes, aripaev.ee mediates YLE Uutiset.

Russian ambassador Aleksandr Veshnjakov said several days ago that Russia will not stop the cargo of oil products and containers through Baltic countries due to the lots of unused resources in Latvia’s ports. By saying that, he contradicted Russian deputy prime minister Sergei Ivanov’s claim that Russia will give up of the transit through other countries.

The ports in Latvia and Lithuania are winning the most from the situation as the both countries have a valid border agreement. However, Estonia’s negotiations with China have been successful and a container terminal will be established in Muuga near Tallinn. The first ships from China should arrive in couple of years, the Finnish news channel writes.

Source: BBN

Buyers from St. Petersburg push up apartment prices in Narva-Jõesuu

The most expensive apartments in Northeast Estonia are in Narva-Jõesuu. 

Eesti Päevaleht writes with reference to city24.ee that the reason why apartment prices in Narva-Jõesuu have been growing is buyers from the nearby St. Petersburg who have been purchasing property in the quiet resort.
 
According to city24.ee, the most expensive apartment on sale at present in Northeast Estonia costs EEK 4.4 million. There is also one apartment on sale costing EEK 4.3 million and another for EEK 4.2 million.

“We have customers in Estonia, but most of our buyers are from St. Petersburg and relatively wealthy people,” said Irina Popova, representative of the developer who owns the three above apartments.

New large apartments in St. Petersburg cost about 10 million rubles which is about EEK 4.5 million.

A new apartment in Kadriorg, the green area of Tallinn, costs about the same.

Source: BBN