Trade in machinery and equipment doubled

According to Statistics Estonia, in September compared to September of the previous year, exports of goods grew by 41% and imports by 35% at current prices. Exports and imports were mostly influenced by the remarkable increase of trade in machinery and equipment.

In September 2010, exports of goods from Estonia amounted to 13.2 billion kroons (847 million euros) and imports to Estonia to 13.5 billion kroons (862 million euros). The trade deficit amounted to 0.3 billion kroons (15 million euros), which decreased more than twice compared to September 2009.

In September, the biggest share in Estonia’s exports was held by the commodities of machinery and equipment (a quarter of Estonia’s total exports), mineral products (13%) and metals and products thereof (10%). Exports of machinery and equipment increased twofold or by 1.6 billion kroons (103 million euros) compared to September of the previous year. Exports of metals and products thereof and wood and products thereof also increased significantly (72% and 41%, respectively).

In September the biggest share in Estonia’s imports was held by machinery and equipment (27% of Estonia’s total imports), mineral products (13%) and agricultural products and food preparations (11%). Compared to September 2009, arrivals of machinery and equipment increased nearly twofold or by 1.7 billion kroons (110 million euros). Imports of metals and products thereof also increased significantly.

In September the main countries of destination were Sweden (17% of Estonia’s total exports), Finland (16%), Latvia and Russia (both 10%). Compared to September of the previous year, exports to Sweden doubled. Exports increased significantly also to Finland and Russia. Electrical equipment and wood and products thereof were mainly exported to Sweden, electrical equipment and furniture to Finland, mineral fuels and mechanical equipment to Latvia and mechanical equipment and paints and varnishes to Russia.

The main countries from where goods were imported to Estonia were Finland (16% of Estonia’s total imports), Germany and Sweden (12% from each). The biggest increase was announced in the arrivals from Finland and Sweden. Mineral fuels and electrical equipment were mainly imported from Finland, vehicles and parts thereof and electrical equipment from Germany and Sweden.

During the nine months (January–September 2010) the turnover of exports of goods from Estonia increased by 28% and of imports to Estonia by 23% compared to the same period of the previous year. The turnover of exports from Latvia increased by 29% and from Lithuania by 28% (imports by 18% and 29%, respectively).

Read more and see graphs on Statistics Estonia website

The share of bad loans decreased

Household borrowing activity showed no notable pickup signs in October. The volume of new housing loans declined, amounting to 541 million kroons, which is nearly 9% less than a year ago. At the same time, as a result of an increase in 6-month EURIBOR, the interest margin on new housing loans went down to 2.1% in October. The turnover of other household loans was a tenth smaller year-on-year. Leasing turnover was 50% higher year-on-year, reflecting a rise in the acquisition of vehicles by households.

Corporate loan and leasing stock amounted to 2.35 billion kroons, having decreased on September, but exceeding that of October 2009 by 17%. Over half a billion kroons went to the industrial and real estate sectors, whereas trade received about 400 million kroons. Compared to the previous month, the interest margin on long-term corporate loans increased to 3.1%.

Due to continuously subdued borrowing activity and depreciation of loans, the loan and leasing portfolio stock decreased by 1.6 billion kroons in October. At end-October, the stock was 6.6% smaller year-on-year, declining to the level recorded three years ago: 238 billion kroons.

The share of loans overdue by more than 60 days shrank by 182 million kroons in October, declining for a second consecutive month. Both corporate and household bad loans diminished relatively equally. Nevertheless, due to a shrinkage in banks’ loan portfolio, the share of overdue loans remained at the level of 7.0%. With the share of bad loans decreasing, banks continued to lower their provisions. In October, provisions were reduced by 193 million kroons. However, 78% of loans overdue by more than 60 days were still covered by write-downs at the end of the month.

Modest credit demand is also reflected by ongoing deposit growth. Irrespective of low interest rates, deposits hiked by approximately 1.2 billion kroons on September, mostly as a result of growing corporate deposits. Household deposits increased by 61 million kroons.

Author: Jaak Tõrs, Head of the Financial Stability Department of Eesti Pank

Read more and see graphs here on the Bank of Estonia website