Insufficient demand on domestic and external markets

According to Statistics Estonia, in November 2009 compared to November of the previous year, the production of industrial enterprises decreased 14%.

The decrease in industrial production began to slow down in October when the decrease was 21% compared to the same month of the previous year. 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 and November have remarkably improved due to comparison with a lower reference base than in case of the previous months of the year.

The production in manufacturing fell 13% in November 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 the manufacture of beverages, textiles, refined petroleum products, electronic products and motor vehicles. The decrease was the smallest in the manufacture wood and paper (0.5% and 4%, respectively). The manufacture of wearing apparel, leather, chemical products and machinery and equipment fell more than 30%. The manufacture of building materials, metal products, electrical equipment as well as the repair of machinery and equipment decreased more than 20%.

In November, the total industrial production grew 3% compared to the previous month, the industrial production in manufacturing increased 4% 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%.

In November compared to November of the previous year, the production of electricity decreased 32%, and the production of heat increased 2%. The decrease in electricity production was caused by a partial replacement of own production with imports from Lithuania and Latvia.

The volume index and trend of production in manufacturing

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

Read more here from Statistics Estonia website

General Government’s budgetary position slightly improved

According to Statistics Estonia, the Estonian general government sector surplused in the 3rd quarter 2009 by 1.4 billion kroons. The consolidated gross debt level rose up to 13.8 billion kroons.

In the 3rd quarter, after three consecutive quarters in deficit, the total revenues of the general government sector consolidated budget exceeded the expenditures by 1.4 billion kroons once more. Through the years the biggest surplus was gained in the 3rd quarter, but since 2002 the only quarter in deficit was the last one — until 2008, when the surplus was achieved only in the 3rd quarter.

Compared to the 2nd quarter the general government’s wage costs decreased the most (1.1 billion kroons), similarly, the general government transfers to other sectors to cover operating expenses decreased almost by half. In the 3rd quarter the expenses for social welfare were 0.5 billion kroons less than in the previous quarter, but compared to the 3rd quarter of 2008 the social benefits increased by 700 million kroons due to the growth in expenses for unemployment benefits and state pensions. During the year the investment expenditures decreased the most (35%), but the usage of European funds for making the capital expenses increased considerably. The unusually grown receipts of proprietors’ income have played their role in improved budgetary situation.

This surplus is still not sufficient to counterbalance the deficit of the first half-year: the nine months’ total expenditures of the general government sector consolidated budget exceeded the revenues by 7.9 billion kroons, accounting for 4.9% of the same period’s GDP. In the nine months the general government sector’s consolidated revenues made up 65 and expenditures 73 billion kroons; in 2008 69 and 71 billion kroons, respectively.

The general government gross debt level continued to grow in the 3rd quarter; the debt level according to Maastricht criteria has increased since the beginning of the year almost by a billion kroons — to 13.8 billion kroons. The central government’s debt level slightly decreased in the 3rd quarter (25 million kroons), but grew by 36% compared to the same period of 2008. The debt of the local government sector increased by 125 million kroons in the 3rd quarter, 23% within a year. While the central government has financed its activities mainly by contracting loans, the largest local authorities issued securities to find disposable funds.

General government surplus/deficit and gross debt level,
1st quarter 2001 – 3rd quarter 2009


Diagram: General government surplus/deficit and gross debt level, 1st quarter 2001 – 3rd quarter 2009


Source: Statistics Estonia

Estonian Air to fly to Nice and Athens

The national carrier Estonian Air has confirmed plans to launch direct flights from Tallinn to Nice in France and the Greek capital city Athens.
The airline is to start flying to Nice on 1 May and to Athens on 5 July.
Flights to Nice will be made on Saturdays, taking off from Tallinn at 7 a.m. and from Nice at 10:05 local time, Estonian Air said.
Flights to Athens are scheduled for Mondays, departing from Tallinn at 12:10 p.m. and from Athens at 4:40 p.m. local time.
Estonian Air spokeswoman Ilona Eskelinen said earlier in connection with the opening of new routes that the airline plans to make further changes in its summer timetable depending on where customers want to fly at the moment.

Source: Estonian Review

New York Times wrote about Estonia’s euro endeavours

In its Tuesday (15.12.2009) issue, The New York Times contained an overview of the euro aspirations of Estonia and the other Baltic countries and of the problems connected with it.
The paper finds that Estonia has fared better in the financial crisis than its two fellow former Soviet republics Latvia and Lithuania because it was more prudent about foreign borrowing and fiscal discipline in the boom years.
The New York Times writes that the decision regarding Estonia’s accession to the euro zone would be made next summer and it would also send a powerful political signal about a country that used to be part of the Soviet Union, at a time when many Eastern Europeans are worried about Russian muscle-flexing.
Privately, some Western European officials and central bankers say the euro area has enough problems, “notably the huge fiscal deficits of countries like Greece, Ireland and Spain”, without taking in poorer new members.
The New York Times writes that many Eastern European governments complain that the economic criteria of the Maastricht Treaty, which laid down the rules for the euro zone, have been applied more stringently to the newcomers who joined in 2004 and 2007 than they were to the euro zone’s founders.
The paper writes that Estonia intends to have an impeccable case to present and has made additional progress on inflation, even in the past month, when analysts forecast the country would not join until 2012.
“It is probable that we will fulfil all the Maastricht criteria already in 2009,” Finance Minister Jürgen Ligi of Estonia said last week.
The article, by Reuters columnist Paul Taylor, quotes the opinion of EU Economic and Monetary Affairs Commissioner Joaquin Almunia in an interview to the Austrian magazine Profil that Estonia, which will be formally assessed by the European Commission in May, was well on its way to membership.
“This country has made good progress towards fulfilling the criteria,” he said. “If everything goes well, we could in June 2010 give the green light for the 17th member.”
The paper points out that while the admission of Estonia would bolster morale in the other Baltic states, which face at least two more years of sharp austerity before they can hope to qualify, some economists say the E.U. should be bolder and admit all three now.
The paper also mentions the opinion of Zsolt Darvas, a fellow at Bruegel, a research institute in Brussels, who argued that the E.U. should re-interpret the euro criteria to admit the three Baltic states immediately with compensatory economic measures, because together they account for less than 1% of the euro-zone’s economy, so the effect of any adjustment problems on the other members would be minuscule.

Source: Estonian Review

Estonian youths most active concertgoers in EU

Young Estonians are the most active concertgoers in the European Union, according to a fresh Eurostat study released Thursday.
The study states that 71% of Estonians aged 16-29 have been to at least one concert during the past year, which is the highest percentage among European Union nations.
Young people in Portugal and Slovakia are also active concertgoers, as 70% of youths in each of those countries have attended a concert within the past year.
The fewest young people attend concerts in Malta (29%) and Bulgaria (32%).
On average in the European Union, 54% of young people attend at least one concert each year.
In its study, Eurostat included rock concerts as well as opera, ballet and other musical performances.

Source: Estonian Review

Estonia’s internet penetration among highest in EU

According to a fresh Eurostat study, the share of Internet users in Estonia is above the European Union average, but when it comes to e-commerce the Baltic nation places at the lower end of the scoreboard.
At the beginning of this year 88% of young Estonians aged 16-24 used the Internet practically every day. The indicator was the same in Denmark and only one EU country — the Netherlands — recorded a higher figure or 90%. The EU average was 73%.
More broadly, of people aged 16-74, daily Internet users made up 54% in Estonia compared to 48% in the 27-nation bloc on the average.
At the same time, only 17% of Estonians had purchased goods or services for themselves online, it appears from the survey. The EU average was 37% and the figures recorded in leading countries were above 60%.

Source: Estonian Review

Crisis: Latvia exports more cars than imports

Latvia has become a net exporter of cars as banks in the bailout-dependent Baltic state liquidate vehicles that were pledged as collateral by insolvent borrowers.

Bloomberg reported last week that the value of exported cars was 86.3 million lats ($174 million) in the year through October, compared with imports of 81 million lats in the period, according to the Riga-based statistics office. That corresponds to 10,092 exported passenger vehicles, and 8,509 in car imports in the first 10 months.

Bad debt will continue to swell next year at Stockholm-based Swedbank AB, the largest Baltic lender, the bank’s Chief Executive Officer in Latvia Maris Mancinskis said on Nov. 17. That means lenders will keep calling in collateral to offset losses, with car loans representing the biggest retail borrowing item after mortgages. Repossessed cars “largely contribute” to the surge in vehicle exports, the statistics office said.

Read more from BBN