One-off transactions pulled the current account into deficit in January 2017

The flash estimate1 put the Estonian current account at 251 million euros in deficit in January 2017. The cause of the deficit was large one-off import transactions for transport vehicles. The deficit on the goods and services account was 240 million euros. Goods exports grew by 9% and goods imports by 39%, so the deficit on the goods account widened to 342 million euros. Exports of services increased by 12% and imports by 10%, so the surplus on the services account was larger than a year previously at 102 million euros. The net outflow on the primary and secondary income accounts totalled 11 million euros, which was 36 million euros less than a year earlier.

The current and capital accounts were in deficit by a total of 220 million euros in January, meaning Estonia was a net borrower from the rest of the world. Loan liabilities increased and other investment assets were reduced in order to finance the deficit.

1 The quarterly balance of payments is compiled from a combined system of representative primary data sources, including surveys of companies, while the monthly balance of payments draws from a considerably smaller database. Although the monthly report uses as much data available for the month reported as possible, including administrative data sources and reports on international payments, it is subjective to a certain degree, which is why it is called an estimate. Once the quarterly balance of payments is released, the monthly balances of payments are adjusted accordingly. For more on the principles used in compiling the flash estimate, see http://statistika.eestipank.ee/failid/mbo/kiir_mb_eng.html

Eesti Pank publishes the flash estimate of the balance of payments monthly for the last month but one. Eesti Pank will publish the balance of payments for the first quarter of 2017 on 8 June 2017.

Statistical releases are published by Eesti Pank together with statistical data. The release is independent of economic policy releases and is presented separately from them.

 

See better graph here 

Source: Bank of Estonia

Connections between housing prices and housing credit in Estonia

This paper of Bank of Estonia investigates the mutual dependence between housing prices and housing credit in Estonia, a country which experienced rapid debt accumulation during the 2000s and big swings in house prices during that period. We use Bayesian econometric methods on data spanning 2000–2015. The estimations show the interdependence between house prices and housing credit. More importantly, housing credit shocks had a stronger effect on house prices in the period of declining credit turnover. The asymmetry in the linkage between housing credit and house prices highlights important policy implications, in that if central banks increase capital buffers during good times, they can release credit conditions during hard times to alleviate the negative spillover into house prices and the real economy.

Read more here (2/2017 Juan Carlos Cuestas, Merike Kukk. Asymmetries in the interaction between housing prices and housing credit in Estonia)

The number of agricultural holdings continues to decrease

According to Statistics Estonia, the preliminary results of the Farm Structure Survey 2016 indicate that there were 16,700 agricultural holdings with at least one hectare of agricultural area or agricultural holdings mainly producing for sale in Estonia, which is approximately 2,500 holdings less than three years ago.

Although the number of dairy and pig farmers has decreased in the last three years, it appears that they have mainly reorganised their activities. The agricultural holdings that have terminated their activities are likely primarily the ones that only maintain their lands, i.e. agricultural holdings with no agricultural production, but whose permanent grassland maintained in good agricultural and environmental conditions is also considered as utilised agricultural area. This is a logical result of administrative restrictions. The agricultural area has not been removed from use, but is now in the possession of active agricultural producers.

Whereas the number of small holdings has decreased many times over a long period (by 6,600 holdings in the last ten years), the size of agricultural area has experienced a growth trend for a while. It has increased by more than 88,000 hectares in ten years, incl. by more than 37,000 hectares in the last three years, and already amounts to 995,000 hectares.

As of 1 September 2016, there were 6,970 holdings in Estonia that kept farm animals, poultry or bees. In the past decade, the number of holdings with animals has decreased by two times. The number of holdings engaged in cattle and pig farming as well as sheep and poultry farming has decreased. Mainly holdings of natural persons with a small number of animals have terminated their livestock farming activities. In the last three years, 790 holdings, i.e. every third, finished keeping dairy herds. Two thirds of them kept 1–2 cows for their own consumption purposes. Especially noticeable is the five-fold decrease in the number of pig farmers. Whereas until 2013 livestock farming increased also in terms of livestock units despite major decline in the number of livestock farmers, in the last three years it has decreased mainly as a result of reduction in dairy herds and pig farming.

As a result of constantly increasing concentration, Estonian agriculture has developed a structure where 1,300 holdings, i.e. 8% of total number of holdings, provide 81% of the total agricultural output. They use 67% of utilised agricultural area and in their possession is 81% of livestock farming, measured in livestock units. Although the number of dairy cows in large holdings has decreased in the past three years, the majority of dairy cows (63%) are still kept in holdings with at least 300 animals. Almost all pig farming is now in large holdings, and 97% of pigs are kept in holdings with at least 1,000 pigs. Poultry farming is also very concentrated in Estonia – 97% of poultry are kept in poultry houses with at least 1,000 poultry.

Despite the continuous decrease in the number of small holdings, their large share still characterises Estonian agriculture. Holdings with economic size less than 4,000 euros constitute 54% of the total number of holdings, but all together they yield less than 2% of total standard output of agricultural holdings. While production concentration into larger holdings is characteristic of the entire European Union, a large share of small holdings with minimum output is more typical of Eastern European countries.

Along with the concentration in production, the share of rented land has increased year by year. While ten years ago, the share of rented land was 55% of agricultural area, it had reached already 65% in 2016. In the past three years, the share of rented land and other tenure (mainly land used free of charge) has increased by 4%. Agricultural land is rented more by larger legal persons. While the share of owned land constituted the majority (77%) of the agricultural area of holdings with less than 10 hectares and about 35% of the agricultural area of holdings with 50 to 100 hectares (the rest being rented land and other tenure), it constituted only about 30% of the agricultural area of holdings with at least 100 hectares, the majority of the agricultural area being rented land.

The Farm Structure Survey 2016 was organised by harmonised methodology and with co-funding from the European Commission in all European Union member states. The Farm Structure Survey provided data also about the labour force of agricultural holdings, production methods and rural development. Statistics Estonia conducted the survey in Estonia. All data about Estonia are published in 2017.

Source: Statistics Estonia

Shipment of goods declined in 2016

According to Statistics Estonia, in 2016, the number of international traffic passengers served by Estonian ports increased by 4%, but the freight volume of ports in tonnes decreased by 4% compared to the previous year.

Last year, the year of marine culture, a record number of passengers used Estonian ports. In 2016, 10.5 million passengers visited Estonian ports by international transport, which is 4% more than in 2015. The growth was mainly due to the increase in the number of passengers travelling between Estonia and Finland, where 8.8 million passengers were served. 164,000 more passengers arrived from Finland and 160,000 more passengers departed to Finland compared to 2015. Between Estonia and Sweden 1.2 million sea passengers were transported, i.e. 3% more passengers compared to the previous year. 498,200 cruise passengers arrived by sea, i.e. 1% more than the year before. 7.7 million passengers used Estonian ships in international sea traffic.

The number of passenger ship calls at Estonian ports in international sea traffic was around 6,250, i.e. 4% more passenger ships (incl. ro-ro passenger ships) than in 2015, and around the same number of cruise ships (285) called at Estonian ports as in 2015. On international routes around 1.9 million vehicles (excl. transit vehicles) were served by ports; 71% were passenger cars and 25% were trucks and trailers.

On main national ship lines around 2.3 million passengers were transported, which is about as much as in 2015. On those lines over 400 ship trips more were made than in 2015. In 2015, there were over 14,800 trips and, in 2016, over 15,200 trips. On Estonian national lines approximately 933,700 vehicles were served by ports.

In 2016, Estonian ports handled 33.6 million tonnes of cargo, which is 4% less, i.e. 1.3 million tonnes less, than a year earlier. 8% less goods were loaded and 7% more goods were unloaded than in 2015. In 2016, around the same number of cargo ships called at Estonian ports as in 2015. The average gross tonnage of cargo vessels totalled about 11,000.

Transportation of goods through the ports declined last year due to a decrease in transit cargo. Transit goods were loaded and unloaded in ports in the amount of 18.1 million tonnes, which is 11% less than in 2015. 12.7 million tonnes of transit cargo were loaded and 5.4 million tonnes unloaded at Estonian ports. Transit cargo loading fell by 18%, but transit cargo unloading increased by 14%. The most frequently handled group of transit goods loaded at Estonian ports was refined petroleum products (7.5 million tonnes), although the transport of these products decreased by a third in a year. The loading of chemicals and chemical products as transit goods amounted to 4.9 million tonnes, which is 17% more than the year before. The most frequently handled group of transit goods unloaded at Estonian ports was also refined petroleum products (4.5 million tonnes), which is 14% more than in 2015.

9.9 million tonnes of goods were transported abroad through ports and 5.6 million tonnes of goods arrived at Estonian ports – 9% and 2% more than in 2015, respectively. Goods transported abroad were mainly products of agriculture and forestry (3.2 million tonnes), a mixture of types of goods transported together (2.9 million tonnes) and products of mining and quarrying (1 million tonnes). Goods that arrived at Estonian ports included primarily a mixture of types of goods transported together (2.8 million tonnes) and products of mining and quarrying (1.4 million tonnes).

Sea container transportation through ports (expressed in TEUs) decreased by 2% compared to the previous year amounting to about 204,400 TEUs in 2016. The number of containers shipped out of Estonian ports on vessels was about 100,300 TEUs and the number received at Estonian ports was 104,100 TEUs.

Source: Statistics Estonia

Estonia’s average salary in 2016 was 1,146 euros

According to Statistics Estonia, in 2016, the average monthly gross wages and salaries were 1,146 euros; compared to 2015, the average monthly gross wages and salaries increased by 7.6%. The annual average monthly gross wages and salaries increased in all economic activities. The monthly gross wages and salaries were highest in the 4th quarter.

When in 2014 and 2015, the annual increase of the average monthly gross wages and salaries remained at around 6%, in 2016, the growth increased. Real wages, which take into account the influence of the change in the consumer price index, increased, compared to 2015, due to stable consumer prices by almost as much as the average monthly gross wages and salaries – 7.5%.

In 2016, compared to the previous year, irregular bonuses and premiums increased by 20.4% per employee. Irregular bonuses and premiums affected the year-over-year increase of average gross monthly wages and salaries by 0.4 percentage points.

In 2016, the average monthly gross wages and salaries continued to be highest in information and communication and financial and insurance activities. The year-over-year increase in average monthly gross wages and salaries was fastest in administrative and support service activities (16.4%) and real estate activities (14.3%). Above-average growth in wages and salaries was also recorded in agriculture, forestry and fishing (11.7%), information and communication (10.2%), accommodation and food service activities (9.5%), human health and social work activities (9.0%) and in education (7.7%).

The year-over-year growth of monthly gross wages and salaries was fastest in the Estonian private sector (8.9%) and slowest in state institutions (5.2%).

In 2016, by county, the average monthly gross wages and salaries continued to be highest in Harju (1,271 euros) and Tartu (1,149 euros) counties and lowest in Põlva (864 euros), Saare (880 euros) and Jõgeva (884 euros) counties. The year-over-year growth of monthly gross wages and salaries was fastest in Lääne and Tartu counties and slowest in Hiiu and Võru counties.

According to the Wages and Salaries Statistics Survey, the number of employees converted to full-time units decreased in 2016, compared to the previous year, by 1.2%. The biggest year-over-year decrease in the number of employees in full-time units, compared to 2015, occurred in other service activities, real estate activities and in mining and quarrying. The economic activities that saw an increase in the number of employees in 2016 include financial and insurance activities, human health and social work activities, professional, scientific and technical activities and information and communication activities.

In 2016, the average hourly gross wages and salaries were 6.90 euros; compared to 2015, the hourly gross wages and salaries increased by 6.0%.

In 2016, the average monthly labour costs per employee were 1,548 euros and the hourly labour costs were 10.28 euros. Compared to 2015, the average monthly labour costs per employee increased by 7.7%.

4th quarter of 2016The average monthly gross wages and salaries were highest in the 4th quarter – 1,182 euros, having increased, compared to the 4th quarter of 2015, by 7.0%, remaining on the same level with the year-over-year growth of the previous quarter. The average monthly gross wages and salaries were 1,140 euros in October, 1,158 euros in November and 1,248 euros in December. In the 4th quarter of 2016, the average hourly gross wages and salaries were 7.08 euros, having increased by 6.1% compared to the 4th quarter of 2015.

In the 4th quarter of 2016, the average monthly gross wages and salaries were also highest in information and communication and in financial and insurance activities. Compared to the 4th quarter of 2015, the average monthly gross wages and salaries increased in all economic activities. In the 4th quarter, the largest increase in average monthly gross wages and salaries occurred in administrative and support service activities (15.5%), education (9.5%) and in real estate activities (9.3%). The annual increase in average monthly gross wages and salaries was slowest in professional, scientific and technical activities and in construction.

In the 4th quarter of 2016, compared to the 4th quarter of 2015, irregular bonuses and premiums increased by 17% per employee. Irregular bonuses and premiums affected the year-over-year increase in average gross monthly wages and salaries of the 4th quarter by 0.5 percentage points. Without irregular bonuses and premiums, the average monthly gross wages and salaries increased, compared to the 4th quarter of 2015, by 6.4%.

Average monthly gross wages and salaries and their change by economic activity, 2015–2016

Statistics Estonia conducts the Wages and Salaries Statistics Survey on the basis of an international methodology since 1992. In 2016, the sample included 12,350 enterprises, institutions and organisations. The average monthly gross wages and salaries have been given in full-time units to enable a comparison of different wages and salaries, irrespective of the length of working time. Calculations of the monthly gross wages and salaries are based on payments for time actually worked and remuneration for time not worked. The hourly gross wages and salaries do not include remuneration for time not worked (holiday leave pay, benefits, etc.). In short-term statistics, the average gross wages and salaries are measured as a component of labour costs. Labour costs include gross wages and salaries, employer’s contributions and employer’s imputed social contributions to employees.

The statistics are based on the questionnaire “Wages and salaries”, the deadline of which was 18 October 2016. Statistics Estonia published the quarterly summary in 26 working days. For the statistical activity “Wages and salaries”, the main representatives of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia (see better graph here)

Estonia’s GDP at current prices was 20.9 bEUR in 2016

According to Statistics Estonia, in 2016, the gross domestic product (GDP) of Estonia increased 1.6% compared to 2015. In the 4th quarter of 2016, the Estonian economy grew 2.7% compared to the 4th quarter of 2015.

In 2016, the GDP at current prices was 20.9 billion euros.

The year was characterised by a slow but steady growth of the GDP. In different quarters of 2016, the increase in value added in the activities of trade, information and communication as well as transportation influenced the growth of the Estonian economy the most. In the last three years, transportation slowed the economy the most, and its decline continued in the 1st quarter. However, from the 2nd quarter onwards transportation contributed positively to the GDP growth at real prices.

In 2016, more than half of economic activities influenced the economy positively. Information and communication contributed to the increase of the GDP the most due to the strong growth in software development services. The growth of value added of trade was the highest in the comparison of the last four years mainly due to a stable growth in retail and wholesale trade. Although the value added of the largest Estonian activity, manufacturing, decreased in the 1st quarter, the value added increased 0.8% in total in 2016.

In 2016, net taxes on products influenced the Estonian economy positively. The receipts from value added and excise taxes grew. In addition, payments of subsidies increased.

After a decline in 2015, the real exports of goods and services rose by 3.6% in 2016 (including the exports of services by 4.9%). The real imports of goods and services increased 4.9%. The exports of goods and services were mainly affected by increased exports of electrical equipment, wood and products of wood and electronic equipment. The imports of goods and services was affected by the rise in the imports of motor vehicles, base metals, pharmaceutical products and chemicals. The impact of the exports and imports of the remaining commodity groups was modest. Net exports, i.e. the difference between exports and imports, was positive in 2016. The share of net exports in the GDP was 4%, which was the same level as in 2015.

In 2016, domestic demand increased 2.6%, affected mainly by increased household consumption expenditures. The increase in household final consumption expenditures was mostly caused by a rise in expenditures on transportation, food and recreation. In addition, the general government and non-profit institutions’ final consumption expenditures increased. Real gross fixed capital formation decreased 2.8% mainly due to less investments in buildings and structures by enterprises and in equipment and machinery by the government sector. Domestic demand grew faster than the GDP. The total final consumption expenditures, gross fixed capital formation and changes in inventories was smaller than the GDP by output method, totalling 97.7% of the GDP.

In 2016, the GDP grew faster than the number of hours worked and persons employed.  Therefore, labour productivity per employee increased by 1.4% and labour productivity per hour worked increased by 1.2%. At the same time, the labour costs related to GDP production have increased. Unit labour cost grew 4.2% compared to 2015.4th quarter of 2016

The GDP at current prices was 5.6 billion euros in the 4th quarter of 2016.

In the 4th quarter of 2016, the Estonian economy grew 2.7% compared to the 4th quarter of 2015. In the 4th quarter, the seasonally and working-day adjusted GDP increased by 1.9% compared to the 3rd quarter of 2016, and by 2.8% compared to the 4th quarter of 2015.

The GDP in the last quarter of 2016 was driven the most by a rise of value added in the information and communication activity due to an increase in software development services. Furthermore, the value added in trade, transportation, energy, administrative and support service activities, manufacturing and construction also provided significant support for economic growth. Compared to recent years, more economic activities contributed positively to the GDP growth.

Contribution to the GDP growth, 4th quarter 2016

In the 4th quarter, the number of persons employed and hours worked decreased, but the GDP increased. Therefore, compared to the same quarter of the previous year, labour productivity per employee and labour productivity per hour worked increased. Unit labour cost increased 2.5% in the 4th quarter of 2016.

After decreasing in the 3rd quarter, in the 4th quarter of 2016 the domestic demand grew 3.7% in real terms, compared to the 4th quarter of 2015. Domestic demand was mainly affected by enterprises’ increased inventories of goods and increased final consumption expenditures. In the 4th quarter, real gross fixed capital formation fell 5.5% mainly due to a decrease of investments in buildings and structures by the enterprise sector. At the same time, investments of enterprises in equipment and machinery increased. For all other sectors, gross fixed capital formation grew compared to the previous year.

In the last quarter of 2016, the real exports of goods and services increased 2.7% and the real imports of goods and services 2.4%, compared to the same quarter of the previous year. The exports of goods and services grew due to an increase in the exports of electronic equipment, mineral products and wood and of products of wood. The imports were affected positively by other transport equipment and base metals. The share of net exports in the GDP was 3.3%.

Source: Statistics Estonia (see better graph here)

In 2016 the total profit of the business sector decreased by 10 pct

According to the preliminary data of Statistics Estonia, in 2016 the total profit of the business sector was 2.7 billion euros, which was 10% less than the year before. The business sector’s total profit decreased for second year in a row.

Compared to 2015, the total profit decreased in most economic activities. The biggest contribution to the total profit was made by trade and energy enterprises. The growth in the profit of the business sector was negatively affected mainly by manufacturing, real estate and transportation and storage enterprises. The profit of manufacturing decreased by a third compared to 2015, mainly due to the decrease in profits in the export-oriented manufacture of fuel oil, metal products and wood.

In 2016, enterprises sold goods and services for 50.2 billion euros, which was 2% more than the year before. The biggest growth was in arts, entertainment and recreation. The turnover of trade enterprises, which have the biggest share in the total turnover of the business sector, increased 4%, affected mostly by an increase in the turnover of motor and retail trade. The turnover of manufacturing enterprises increased 2% compared to the year before.

Compared to 2015, the total costs of enterprises increased 3%, including 5% increase of labour costs. The number of persons employed and the number of hours worked increased 3% and 1%, respectively. In 2016, the labour productivity of the business sector on the basis of value added amounted to an average of 21,600 euros per person employed, i.e. 2% lower than in 2015.

The investment activity of enterprises continued to decrease for the fourth year in a row. In 2016, enterprises invested 2.0 billion euros, which is 12% less than the year before. Similarly to 2015, the largest investments were made mainly in equipment and machinery and buildings and structures. The main investors were manufacturing, trade, and transportation and storage enterprises with a half of the total investments of enterprises. Compared to 2015, the investments in transport equipment and computer systems increased. Other investments decreased, with the biggest decrease registered in investments in acquisition of buildings and structures.

In the 4th quarter of 2016, enterprises sold goods and services for 13.2 billion euros, which was 4% more than in the same period of 2015. In the 4th quarter of 2016, enterprises invested 612 million euros, i.e. a fifth less than in the 4th quarter of 2015.Total profit of the business sector, 2002–2016

The statistics are based on the questionnaire “Economic activity, quarter”, the submission date of which was 20 January 2017. Statistics Estonia published the quarterly summary in 24 working days. For the statistical activity “Financial statistics of enterprises (quarterly)”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia