Estonia helps Ireland to get rid of its municipal waste

Ireland has shipped 2,500 tons of its municipal waste to Estonia that will be burned in Iru waste incineration plant that belongs to state-owned Eesti Energia, writes Eesti Päevaleht daily.

At present the garbage is temporarily stored in Tallinn landfill because the Iru waste-to-energy plant is undergoing regular maintenance.

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Swedish builder Skanska leaves Estonia

The Swedish construction group Skanska announced that it will terminate its operations in Estonia by the end of 2014.

Skanska AS, a holding of the Nordic Skanska group, is a subsidiary of the Finnish-registered Skanska Oy.

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Eesti Pank will exchange Latvian lats for euros in January and February

 

On 1 January 2014 Latvia will join the euro area and from that date the euro will be used in place of the Latvian lat at the exchange rate of 1 euro = 0.702804 lats. Eesti Pank, like the other central banks of the euro area, will exchange lat banknotes for euros from 2 January until the end of February at no charge.

From 2 January 2014 it will be possible to exchange lat banknotes for euro cash at the central exchange rate and with no service fee in the Eesti Pank Museum during its opening hours. The daily limit per person and per transaction is 1000 euros. Latvian coins will not be exchanged in Eesti Pank.

Lat banknotes and coins can be exchanged at the central rate in bank offices in Latvia until the end of June next year and in 302 Latvian post offices until the end of March. From 1 January the Latvian central bank will exchange lats for euros at the central rate with no limits on amounts or on time.

Lats in current accounts in Latvian banks will be automatically converted to euros at the central rate without any service fee.

The lat will continue to serve as legal tender for two weeks following the changeover to the euro but from 15 January the euro will be the only legal tender in Latvia.

Estonian kroons can still be exchanged in cash handling offices of Swedbank and SEB across Estonia until the end of this year but from 1 January 2014 it will only be possible to exchange kroons for euros in the Eesti Pank Museum.

The Eesti Pank Museum is open from Tuesdays to Fridays 12-17 and on Saturdays at 11-16.

Source: Bank of Estonia

Estonian R&D expenditures 2.19% of GDP

According to Statistics Estonia,  expenditures on research and development in Estonia amounted to 380.7 million euros in 2012, being 3.7 million euros or 1% less than in 2011.

The remarkable growth of Estonia’s expenditures on research and development (R&D) in 2010 and 2011 was the result of considerable investments in new technology in the oil industry. Despite the sizeable cut in investments in the oil industry in 2012, the volume of R&D expenditures in Estonia was preserved. That was possible thanks to the 14% rise in R&D expenditures in non-profit institutional sectors (higher education, government and private non-profit sectors) and to the growth in several economic activities in the business enterprise sector. Thus, for example, R&D expenditures increased almost one and a half times in information and communication, and in professional, scientific and technical activities.

Although the ratio of research and development expenditures to the gross domestic product (GDP) fell from 2.37% in 2011 to 2.19%, the fall was partly due to the GDP growth, with the R&D expenditures unable to show a similar growth rate.

At the turn of the century, the share of government in the financing of R&D expenditures was 60%. Since then, the vigorous increase in funding by the business enterprise sector has reduced this share, which in 2012 remained at 38%. At the same time, the volume of government financing has shown constant growth and in 2012 increased by 20 million euros or 16%. It is worth mentioning here that the EU supports received through the state budget are classified as supports received from the state. The share of government financing in the business enterprise sector is less than one tenth of total R&D expenditures, but even there government financing grew 22% in 2012, from 16.5 million euros to 20.2 million euros, mainly due to the support for small enterprises and research centres financed by Enterprise Estonia.

Even more important is the fact that the share of government-financed R&D expenditures in total general government expenditure continues to rise (with the exception of the year 2009 during the economic crisis). This gives hope that Estonia will fulfil its aims in the R&D domain as stipulated in relevant strategy papers.

Source: Statistics Estonia

R&D expenditures financed by government, 2003–2012
Year Government financing, million euros Government financing as % of general government expenditure
2003 32.5 1.07
2004 36.5 1.11
2005 45.3 1.20
2006 67.3 1.50
2007 79.3 1.45
2008 104.1 1.62
2009 96.4 1.54
2010 102.8 1.77
2011 125.9 2.07
2012 145.8 2.12

The profit of the business sector has improved

According to Statistics Estonia, in the 3rd quarter of 2013 the total profit of the business sector was 945 million euros, which was 5% more than in the same period a year earlier.

Compared to the 3rd quarter of 2012, total profit increased in almost all economic activities. The biggest contribution to total profit was made by activities mainly relying on the domestic market – trade, real estate and energy. The profit of manufacturing, which had been showing a downward trend since the fourth quarter of the previous year and which holds the largest share in the total profit of the business sector, started increasing again. The profit of manufacturing increased 4% compared to the 3rd quarter of last year, first of all due to the increase of profits in the export-oriented manufacture of electronics and wood products.

In the 3rd quarter of 2013, enterprises sold goods and services for 12.9 billion euros, which was 9% more than in the same period a year ago. The turnover of wholesale and retail trade and manufacturing enterprises, which have the biggest share in the turnover of the total business sector, increased 18% and 5%, respectively.

Compared to the 3rd quarter of 2012, the total costs of enterprises increased 10%. Personnel expenses increased 10% as well. The number of persons employed as well as the number of hours worked increased 3%. The labour productivity of the business sector on the basis of the value added amounted to on an average of 5,700 euros per person employed in a quarter and was 5% higher than in the same period a year ago.

In the 3rd quarter, enterprises invested 697 million euros, which is 14% more than at the same time a year earlier. The largest investments were made mainly in equipment and machinery, and in buildings. The main investors were energy, manufacturing and agricultural enterprises with more than a half of the total investments of enterprises. Compared to the 3rd quarter of 2012, only investments in equipment and machinery decreased. Other investments increased – in the acquisition of buildings, the most.

Total profit of the business sector, 1st quarter 2009 – 3rd quarter 2013

Diagram: Total profit of the business sector, 1st quarter 2009 – 3rd quarter 2013

Source: Statistics Estonia

Change in border-crossing requirements shaves off queues in Narva

The flourishing trade of Russian alcohol, tobacco and fuel from Russia into Estonia by locals in Narva has virtually ended after the new regulation took effect last Sunday, writes Äripäev.

Under the new regulations, residents of Narva can within one month import alcohol and fuel from a non-EU countries alcohol only once without having to pay the excise duty. Tobacco imports are free from excise duty for two trips within a month.

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Inflation was caused by housing expenditures

According to Statistics Estonia, the change of the consumer price index in November 2013 was –0.4% compared to October 2013 and 1.5% compared to November of the previous year. Both the monthly and annual change were influenced the most by housing expenditures.

Goods were 0.9% and services 2.5% more expensive compared to November of the previous year.

Regulated prices of goods and services have decreased by 0.9% and non-regulated prices have risen by 2.3% compared to November of the previous year.

Compared to November 2012, the consumer price index was mainly influenced by housing expenditures, whereas more than 80% of the increase in housing expenditures was caused by the electricity that arrived at homes which was 26.8% more expensive than in November 2012. Over a half of the increase in the index caused by electricity was cancelled out by the decrease in prices in transport due to the free city transport introduced in the capital this year and the decrease in motor fuel prices. In November 2013, motor fuel was 4.7% cheaper than in the same month in 2012. Compared to November 2012, of food products, the prices of fish have increased the most (15%) and the prices of eggs and coffee have decreased the most (15%).

In November compared to October, the consumer price index was mainly influenced by housing expenditures which accounted for two fifths of the total decrease, whereas 80% of this was caused by the 2.4% decrease in the price of electricity that arrived at homes. The plane tickets bought for November were 17.4% cheaper than in October and accounted for about a third of the total decrease of the index. The 8.4% price decrease of fruit also had a bigger impact on the index. Compared to October, of food products, the prices of mandarins decreased the most (26%) and the prices of fresh cucumber increased the most (18%).

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Consumer prices fell for the fifth consecutive month

Data from Statistics Estonia show that the consumer price index was 0.4% lower in November than a month earlier and 1.5% higher than a year earlier, like in October. Several favourable conditions combined to keep inflation low, the main one of which was the low inflation in the external environment and particularly the cheaper prices for imported energy, which left prices for motor fuels 4.5% lower than a year earlier and heating energy 3% lower. Inflation in the euro area rose to 0.9% in November, though price rises were held down not only by energy prices but also by the high levels of unemployment and the consequent low level of pressure on consumer prices coming from wage costs.

Food price inflation in Estonia continued to fall in November as good weather brought larger harvests than in previous years in many agricultural regions around the world. Food prices were 1.3% higher than in November of the previous year. This mainly affects unprocessed food such as fruit and vegetables, where inflation was still particularly high in the first half of the year. However, inflation for processed foods is picking up from its current low rate and increased demand is expected to start to push prices of processed foods up faster next year both in Estonia and in the global market. Prices for food including alcohol and tobacco were 2.2% higher in November than a year before due to the impact of excise taxes.

Core inflation, which covers manufactured goods and services that make up 51% of the consumer basket, was very low in November at 0.3%. At a time when the prices of non-energy industrial goods were falling in many euro area countries, there was moderate price growth in Estonia which reached 0.7% in November. The fall in the prices of imported goods offset the effect of domestic wage growth to a large extent. Price rises should be restrained in future by the arrival of additional retail space, which will intensify competition in the domestic market. Given that wage growth accelerated to 8.8% in the third quarter, inflation of close to zero in the prices of services in November was unusually low. Services inflation was pushed down by the introduction of free services and a fall in the prices of communications, and without these lower communications prices, service price inflation would have been 0.6 points higher. These factors will have a reduced effect in the coming months, meaning that prices for services are likely to rise faster as early as the start of the new year.

See a graph here

Source: Bank of Estonia

Author: Rasmus Kattai, Head of the Economic Policy and Forecasting Division, Eesti Pank