The production of food decreased the least

According to Statistics Estonia, in October 2009 compared to October of the previous year, the production of industrial enterprises decreased 21%. In the earlier months of this year, the decrease remained within 30% compared to the same period of the previous year.

As a sharp decline in the industrial production began at the end of the previous year, indicators concerning the production in October have remarkably improved due to comparison with a lower reference base than in case of the previous months of the year.

In October, the total industrial production as well as the industrial production in manufacturing remained at the level of the previous month according to the seasonally adjusted data. From January to April, industrial production declined nearly 4% every month compared to the respective previous month. Since May, the difference compared to the previous month has been in the range of -2% to 2%.

The production in manufacturing fell 22% in October compared to the same month of the previous year. The main reason causing the decline was a continually insufficient demand both on domestic and external markets.

The production decreased in all branches of manufacturing except in the manufacture of beverages, textiles and other transport equipment. The decrease was the smallest in the manufacture of food products (8%), influenced essentially by the decrease in the prices of food products. Since the beginning of the year, the producer prices of milk, flour and oil have decreased significantly. The manufacture of wearing apparel, leather and chemical products, building materials, metal and metal products, electrical equipment, and machinery and equipment fell more than 30%. The manufacture of paper, furniture and motor vehicles as well as the repair of machinery and equipment decreased more than 20%.

In October compared to October of the previous year, the production of electricity decreased 33%, and the production of heat increased 17%. The decrease in electricity production was caused by a partial replacement of own production with imports from Lithuania.

The volume index and trend of production in manufacturing,
January 2000 – October 2009 (2005 = 100)



Diagram: The volume index and trend of production in manufacturing, January 2000 – October 2009 (2005 = 100)

Read more from Statistics Estonia

Decrease of sales of specialised stores 41 pct

According to Statistics Estonia, in October 2009 compared to October of the previous year the retail sales of goods of retail trade enterprises decreased 17% at constant prices. Since July the decrease in retail sales has been relatively stable compared to the same month of the previous year.

In October, the retail sales of goods of retail trade enterprises were 4.5 billion kroons. The decrease in retail sales of goods was most influenced by the stores selling manufactured goods, where the retail sales decreased by 26% compared to October 2008. The retail sales of other specialized stores, such as stores selling computers and their accessories, photography supplies, books, sports equipment, games and toys, etc., decreased most or 41%. The decrease in stores selling household goods and appliances, hardware and building materials which slowed down to some extent in previous months accelerated again in October. In these stores the retail sales of goods decreased 29% during the year, which was one of the greatest decreases over the last six months. The decrease in stores selling textiles, clothing, footwear and leather goods, and the retail sales in non-specialized stores with industrial goods predominating slowed down remarkably compared to previous months. The retail sales of these stores decreased respectively 14% and 25% during the year. The sales campaigns organized in October contributed to the slowdown in the decrease of the retail sales in these stores.

Retail sales in grocery stores decreased 9% compared to October of the previous year. From January to June, the retail sales of these stores decreased 3–10% compared to the same month of the previous year. Since July the decrease has steadily remained within the limits of 9%.

From the beginning of the year, retail sales have decreased every month at constant prices according to the seasonally and working-day adjusted data compared to the respective previous month. Also in October, the retail sales decreased by 1% compared to the previous month.

In October the revenues from sales of retail trade enterprises were 5.4 billion kroons, out of which retail sales of goods accounted for about 85%. Compared to October of the previous year, the revenues from sales decreased 21% at current prices. Compared to the previous month, this indicator increased 4%.

Retail sales volume index of retail trade enterprises and its trend,
January 2002 – October 2009 (corresponding month of previous year = 100)

Diagram: Retail sales volume index of retail trade enterprises and its trend, January 2002 – October 2009 (corresponding month of previous year = 100)

Source: Statistics Estonia

Economic troubles have not weakened Baltic relations

During the session of the Baltic Council in Vilnius and the meeting of the Estonian, Latvian and Lithuanian foreign ministers, Foreign Minister Urmas Paet emphasised that the difficult economic policy decisions made this year in Estonia, Latvia and Lithuania have not changed common foreign policy goals and their implementation.
Paet stated that this year Estonia decided to establish an embassy in Cairo sharing a space with Latvia. “We continued to compile an Estonia-Latvia co-operation report. Estonia also signed agreements with both Latvia and Lithuania for representing each other for the issuing of visas in third countries,” said Paet.
Paet noted that next year the Baltic states must work hard to come out of the economic downturn and to implement common energy and defence projects and continue everyday close co-operation. “One of the greatest challenges in Baltic co-operation this coming year will be fulfilling our international goals despite economic difficulties,” stated Paet. “We must not, for example, make cuts at the expense of security,” he said.
As an example, Paet said that regardless of economic difficulties, the project of the three nations’ armies to create a joint battalion is in the final phase. “This allows us to put Baltbat at the disposal of the NATO Rapid Response Force in the first half of 2010, meeting the deadline,” asserted Paet.
In addition, a central topic of discussion for the Estonian, Latvian and Lithuanian foreign ministers was further co-operation in developing a joint Baltic energy market and energy security as well as co-operation in environmental protection in the Baltic Sea region.
Paet emphasised that co-operation in the environmental sector means making an effort to meet climate goals and taking care of the Baltic Sea. “The burden on the Baltic Sea has reached the limit, and every careless step could lead to irreparable damage. We must focus on preventative measures,” Paet stated. “For the last few years we have worked together to establish an open Baltic energy market. Meeting our climate goals depends greatly on our ability to develop economical and sustainable energy production,” he explained.
Lithuania will give the chairmanship of the Baltic Council over Latvia during the 15th session of the Baltic Council.

Source: Estonian Review

Romania picks up Estonia’s idea for National Garbage Collection Day

Inspired by the “Let’s Do It Estonia 2008” campaign, NGOs in Romania are preparing for a campaign in which volunteers will collect illegally dumped or littered garbage across the country in May 2010.
The Romanian NGO’s behind the initiative have named it “Let’s Do It Romania.”
The initiative’s website at says the action was inspired by the Estonian undertaking in 2008.
Geomapping of illegal dumping sites all over Romania is to start soon, with the NGOs saying there are believed to be around 59 000 such sites in the country.
The idea of a nationwide garbage collecting day has also been picked up by Portugal. The campaign in Portugal is titled “Maos a obra!” (“Put Hands to Work!”) and the garbage collecting day will be 20 March 2010.
The initiative’s website can be found at
The authors of the initiative in Estonia, Rainer Nolvak and his team, used special software based on Google Earth, positioning software for mobile phones and mobile phones with GPS to map and photograph illegal garbage dumps across all of Estonia. Having located the dumps, their initiative ended in a one-day clean-up on 3 May 2008.
Fifty thousand volunteers turned out in the country of 1.3 million to collect 10 000 tons of illegally dumped garbage.
“We are now planning the next step — to share our experience with the international community, so that the software we created and our practice could easily be used to do the same in any other state by volunteers who wish to clean nature,” Nolvak was quoted by AFP news agency as saying in 2008.

Source: Estonian Review

Financial behaviour of enterprises and households continues to be cautious

Compared to September, the corporate and household loan and leasing stock declined in October by 0.4%, i.e., 1.1 billion kroons. The speed of the portfolio decrease has been relatively even across months in 2009 and October was no different in this respect.

Financing portfolios have shrunk by 5.7% year-on-year, constituting 255.2 billion kroons. The volumes of private-sector financing portfolios have been contracting for a year and the contraction has been broad-based, involving nearly all the sectors. The volume of consumer credit to households has been dropping relatively faster, by 9.2%, i.e., 2.8 billion kroons year-on-year.

The companies and households with a debt burden continue to benefit from the low key interest rate. The average value of the six-month EURIBOR remained at a very low 1.02% level in October, which is comparable to September.

Banks’ risk assessments of borrowing households and companies have not changed over the past six months. Interest rates on new loans are currently shaped by banks’ risk assessments, i.e., the margin, which has been around 2.4% for households and 3% for enterprises over the past six months. In October, the respective margins stood at 2.4% and 3.2%.

The level of overdue loans did not rise in October, the share of loans overdue by more than 60 days stayed at the level of 6.4%. The share of overdue loans has been affected by the low interest rate, which has decreased monthly loan repayments, and the fact that banks are actively dealing with customers having payment difficulties. At the same time, the increase in the volume of loans with shorter repayment delays and the continuously difficult economic situation refer to further deterioration of the loan portfolio quality in the months ahead. The total volume of overdue loans grew by 940 million kroons in October. The increase was caused by corporate credit. The capitalisation of banks continues to be high, ensuring that the current complicated economic situation is being coped with.

Corporate and household deposits increased in October by 0.4% and 2.7%, respectively, year-on-year. The stable level of deposits shows that enterprises and households continue to be cautious and accumulate buffers for the future, which they see as uncertain.

Figure 1. Monthly growth of household and corporate loans and leases in Estonia

Figure 2. Share of loans overdue by more than 60 days in the portfolio

Figure 3. The weighted average interest rate on housing loans and long-term corporate loans issued within a month and 6-month EURIBOR

The financial sector statistics and publication calendar are available on the web site of Eesti Pank at

Source: Bank of Estonia
Siret Vildo, Financial Sector Policy Division of Eesti Pank, Specialist in Charge

Report of the central bank about wages

Firms have multiple options at the time of adjusting their wage bills. However, previous literature has mainly focused on base wages. Bank of Estonia broadens the analysis beyond downward rigidity in base wages by investigating the use of other margins of labour cost adjustment at the firm level. Using data from a unique survey, we find that firms make frequent use of other, more flexible, components of compensation to adjust the cost of labour. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. The central bank analyses also shows how the margins of adjustment chosen are affected by firm and worker characteristics. Read more here

Construction volumes decreased by a third compared to last year

According to Statistics Estonia, in the 3rd quarter of 2009 compared to the same period of the previous year, the total production of Estonian construction enterprises decreased 29%. In the 1st quarter of the present year the production was 31% and in the 2nd quarter 28% smaller than a year ago.

In the 3rd quarter of 2009, the production value of construction enterprises amounted to 6.4 billion kroons, of which the production value of building construction was 3.7 billion kroons and the production of civil engineering totalled 2.7 billion kroons. Compared to the same quarter of 2008, the volume of building construction decreased by about a third and the volume of civil engineering by a fourth at constant prices. The decline was caused mainly by the decreased volumes in dwelling construction on domestic construction market. The construction of civil engineering decreased more compared to the previous periods.

On the contrary to the domestic construction market, which is in decline stage, the construction volume in foreign countries increased 10% compared to the 3rd quarter a year ago. The growth was caused by the building construction. The share of construction volumes in the foreign countries accounted for 9% of the total volume of construction in the 3rd quarter.

Compared to the 2nd quarter of the present year, the seasonally and working-day adjusted construction volume decreased by 8%.

According to the data of the Register of Construction Works, in the 3rd quarter of 2009 the number of dwelling completions was 689, i.e. a third less than in the same period of 2008. Half of completed dwellings were situated in blocks of flats. In spite of the decreasing construction costs the demand for new dwellings has been continuously decreasing. In the 3rd quarter of 2009 building permits were granted for the construction of 359 dwellings, which is three times less compared to the same period of 2008. The most popular type of building was one-family dwelling.

In the 3rd quarter of 2009, the number of completed non-residential buildings was 233 with the useful floor area of 156,000 square metres. The useful floor area of commercial and office buildings increased the most. Compared to the 3rd quarter of 2008, the useful floor area and the cubic capacity of completed non-residential buildings decreased.

Construction volume index and its trend, 1st quarter 2000 – 3rd quarter 2009
(average of quarters of 2005 = 100)

Diagram: Construction volume index and its trend, 1st quarter 2000 – 3rd quarter 2009 (average of quarters of 2005 = 100)

Source: Statistics Estonia

Estonian students take third place in Europe for their knowledge

Estonian students are third in Europe after Finland and Ireland for their reading skills and their knowledge of mathematics and science subjects, it appears from a recent European Commission report.
According to the Education Ministry the share of students with a poor achievement level in science subjects is three times lower in Estonia than the average in Europe.
The share of adults in life-long learning has sharply increased. Although data from 2000 shows that Estonia’s indicator was one of the lowest (6.7%), in 2008 it was firmly among the average countries in Europe with 9.8%.
In terms of the number of persons aged from 18 to 24, Estonia is close to the European average, but the number of people dropping out has contracted. Although the share was still 15.1% in 2000 and 14.4% in 2007, last year it fell to 14%.
The European Commission presented its recent report on the situation of education and schooling in the EU at a meeting of EU education ministers.
The report mentions that although achievement of four of the five education aims set for 2010 seems unlikely in Estonia, the country stands well out with its results.


President: creative solutions bring success to Estonia

According to President Toomas Hendrik Ilves, the European common currency should be seen as something that will improve the quality of life in Estonia.
At the “Estonia After the Euro” conference yesterday, President Ilves, in his public discussion with Edward Lucas, a journalist from the British journal “The Economist”, focused on the key aspects of Estonia’s previous success stories of the 1990s and invited the public to discuss how and by which means we could use our relative advantages in the future.
“We turned the size of Estonia into an advantage – we changed rapidly. We chose the way of depoliticised civil servants. We didn’t apply all the recommendations given by other countries. We found our own way to reach our targets,” Ilves said.
According to the head of state, in future Estonia must focus on long-term objectives, as a “project-based” approach cannot be used to accomplish them.
“The transition to the euro is our next ‘project’ of national scope. Now, we need to think of how to implement our creativity and innovativeness to serve today’s objectives and not to become conservative and stick rigidly to solutions that were effective 15 years ago,” said President Ilves. According to the head of state, for that purpose we need to provide the prerequisites in our country for the implementation of long-term policies that would contribute to an improvement in people’s quality of life, while making Estonia a more attractive living environment for both our people and skilled specialists from the other parts of the world.

Source: Estonian Review

31pct less tourists in Latvian hotels this year

In comparison with the 3rd quarter of 2008, number of visitors in hotels and other accommodation establishments in Latvia in the 3rd quarter of 2009 decreased 31%, reports Baltic Course.

Of all visitors 30% were Latvian residents and 70% – foreign visitors. The number of foreign visitors has reduced by 24%. The number of visitors from Great Britain and Lithuania has decreased the most – by 41.5% and 39.7%, respectively.

The highest share of the foreign tourists stayed in Riga – 71% and Jurmala – 11%. In its turn, the highest share of the Latvian residents stayed in Riga – 25%, Ventspils – 11%, Liepaja – 10% and Jurmala – 7%.

Read more from Baltic Business News