The increase in industrial production accelerated

According to Statistics Estonia, in September 2014, the production of industrial enterprises rose 4% compared to September of the previous year. The production increased in manufacturing, but decreased in mining and energy.

Since January, manufacturing has shown a growth in production compared to the same period of the previous year. While in July the increase in manufacturing was 5% and in August 6%, then in September production rose 7% compared to September of the previous year. Production exceeded the volume of September 2013 in most of the branches of industry. The growth in production was influenced the most by an increase in the manufacture of electronic products, where production rose about a quarter. 6% more wood and 9% more metal products were produced. The volume of production fell in the manufacture of electrical equipment, chemicals and furniture.

In September, 71% of the whole production of manufacturing was sold on the external market. Compared to September 2013, export sales of manufacturing production rose 13% and domestic sales 9% according to unadjusted data.

In September 2014 compared to August, the seasonally adjusted total industrial production increased 1%, including a 2% increase in the production of manufacturing 2%.

Compared to September 2013, the production of electricity fell 13% and the production of heat increased 4%.

Diagram: The volume index and trend of production in manufacturing

Read more from Statistics Estonia

Stable growth in retail sales

According to Statistics Estonia, in September 2014 compared to September of the previous year, the retail sales of goods of retail trade enterprises increased 6% at constant prices.

In September 2014, the retail sales of goods of retail trade enterprises were 399 million euros, which was 303 euros per inhabitant. The retail sales in stores selling manufactured goods increased 9% compared to September 2013. Sales increased in most economic activities. Only the retail sales in non-specialized stores selling predominantly industrial goods (e.g. department stores) were smaller than in September of the previous year. The retail sales via mail order or the Internet increased the most, with sales increasing almost by a fourth (24%) compared to the previous year. A higher than average increase occurred also in stores selling pharmaceutical goods and cosmetics (15% growth), in stores selling second-hand goods and in non-store retail sale (stalls, markets, direct sale) (12% growth), in stores selling textiles, clothing and footwear (11% growth) and in other specialized stores, such as stores selling computers and their accessories, stationery, books, sports equipment, games and toys etc. (11% growth).

In September, the retail sales growth in grocery stores slowed down to some extent compared to the previous months. The retail sales of those stores increased 7% in July and 6% in August compared to the corresponding months in 2013, whereas in September the growth was 4%. The growth deceleration in the retail sales of grocery stores was partly influenced by the slowdown in the price decrease of food products – in July the annual price decrease of food products was 2%, in August 1.7%, but only 0.2%in September.

The retail sales of automotive fuel increased 9% at constant prices compared to September 2013.

Compared to the previous month, in September, the retail sales in retail trade enterprises decreased 7% at constant prices. According to the seasonally and working-day adjusted data, the retail sales stayed at the same level compared to the previous month. During the nine months (January–September) of 2014, the retail sales in retail trade enterprises increased 6.5% at constant prices compared to the corresponding period of the previous year.

In September, the turnover of retail trade enterprises was 490.9 million euros, out of which the retail sales of goods accounted for 81%. Compared to September 2013, the turnover increased by 10% at current prices. Compared to the previous month, this indicator decreased 4%.

Diagram: Retail sales volume index of retail trade enterprises and its trend

Source: Statistics Estonia

Tallinn Airport among the best airports in Europe

Tallinn Airport is among the best airports in Europe, based on the overall airport experience determined by travellers who had taken the site’s 2014 airport survey.

The survey conducted by airport guide Sleeping in Airports says that thoughtful touches like rest and relaxation zones, art galleries and museums, libraries that offer book rentals and exchanges, baby-beds in family rooms, and a few fitness and spa facilities help boost the impressiveness of the airports in the list.

Read more from BBN

Estonian Air teams up with tour operators

Estonian Air has signed a cooperation agreement with tour operators Novatours and TEZ Tour to increase its share on the market of charter flights. According to the agreement Estonian Air will operate flights to Turkey and Croatia in 2015.

“This agreement is good news for the airline, tour operators and to all holiday takers from Estonia. It is convenient for passengers to communicate on board of an aircraft in their own language, as well as to see smiling crew members of their domestic airline on their holiday commute. We pay more attention to the market of charter flights so that we can keep our aircraft in regular operation and thus use the free capacity of our fleet economically,” said Indrek Randveer, the CCO of Estonian Air.

Read more from BBN

Central bank sets requirements for housing loans

Eesti Pank is planning to introduce three limits on the issuing of housing loans by commercial banks at the start of 2015, as a precautionary measure to reduce the risks of a lending boom in the future.

The first limit is on LTV (loan-to-value), and states that the loan amount can only be up to 85% of the value of the collateral. If the loan is guaranteed by KredEx then the loan amount can be for up to 90% of the value of the collateral.

The second limit is on DSTI (debt service-to-income), and states that all the monthly loan and lease principal and interest payments of the borrower taken together may amount to only 50% of the borrower’s monthly net income. Net income is regular income that reaches the bank account after taxes have been deducted.

The third limit is that the maximum maturity of housing loans is to be 30 years.

Governor of Eesti Pank Ardo Hansson explained that the requirements for housing loans are a precautionary step by the central bank to contain the risk of a housing bubble in the future. “This reflects the lessons of the last lending boom, when tools like this could have slowed the rate of loan growth and softened the crisis that followed the boom.”

The requirements for housing loans will protect the Estonian financial system against the danger that competing banks may take on excessive risks when lending is growing fast, said Mr Hansson. “The experience from the lending boom is that limits on housing loans protect borrowers too, because they deter transactions in an overheated market that could cause problems for repayments if there is a downturn later.”

The internal rules of the commercial banks for issuing housing loans are mainly within the limits planned by the central bank, and the majority of loans are issued with remarkably conservative conditions, so the limits planned by Eesti Pank will not make the conditions for issuing housing loans tighter than they currently are.

Eesti Pank is planning to introduce the requirements for all the banks operating in Estonia, including branches of foreign banks in Estonia. The limits will apply to loans to households for buying, renovating or building housing in Estonia. The Estonian Financial Supervision Authority will supervise how the limits are met.

It is planned that the commercial banks will be permitted an exemption from the limits for up to 15% of the amount of housing loans issued in a month. The exemption is intended for borrowers who have very good ability to repay the loans or very good collateral for example.

Eesti Pank is planning to impose the limits on issuing housing loans from the start of 2015. The central bank will consult the commercial banks on how the technical details for how the limits will be calculated in November this year.


Read more from Bank of Estonia website

Estonia vulnerable to gas supply disruptions

A European Commission “stress test” report says that if Russia were to completely halt gas imports to the EU, more gas will continue to be delivered to homes and companies – if member states cooperate – even in the case of a prolonged six-month disruption. Estonia, however, is among the most vulnerable EU member states.

The report published on Thursday presents the results of a modeling exercise conducted by 38 European countries, including EU member states and neighboring countries. It analyzes different scenarios, in particular a complete halt of Russian gas imports into the EU for a period of six months.

A prolonged supply disruption would have a substantial impact in the EU, with member states in the East and the Energy Community countries (mostly located in Southeast Europe) being affected the most.

Finland, Estonia, the Former Yugoslav Republic of Macedonia (FYROM), Bosnia and Herzegovina, and Serbia would miss at least 60 percent of the gas they need. This means that even private households could be left out in the cold.

Read more from ERR News

Estonia is 17th in ease of doing business

World Bank Group’s annual Doing Businessreport measuring the regulations that enhance business activity and those that constrain it was published today. In comparison of business regulations and protection of property rights across 189 economies, Estonia is ranked 17th, one place down from last year.

Each economy is evaluated based on how close their business regulations are to the best global practices. They are given the distance to frontier (DTF) score. Estonia’s DFT score is 78.84 – 0.3 percent more than last year – and, along with Denmark and Singapore, it sets the frontier for time it takes to export goods.

Doing Business 2015 measured regulations affecting 10 categories: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

Estonia’s received its best rankings in trading across borders (6th) and registering property (13th), and worst in getting electricity and protecting minority investors (both 56th).

The list is topped once again by Singapore with DTF score 88.27, followed by New Zealand, Hong Kong, Denmark and South Korea. Of the immediate neighbors Finland is 9th, Sweden 11th, Latvia 23rd, Lithuania 24th and Russia 62nd.

Source: ERR News


Reform Party names Maris Lauri as new finance minister

The Reform Party has put forward their new candidate for the position of the finance minister to replace Jürgen Ligi, who resigned on Saturday following a Facebook rant last week at Minister of Education Jevgeni Ossinovski. The position will be filled by the financial analyst Maris Lauri, currently the economic adviser to Prime Minister Taavi Rõivas.

“The first things I will have to do as a Finance Minister are the to see that the 2015 budget passes the readings at the Parliament, take the necessary steps to make sure that the EU structural funds are deployed as soon as possible, and bring in regulations for payday loans,” Lauri said.

She added that the finance ministers of the EU member states will meet next week in Brussels, so she does not have much time to settle in but has to tackle the job head-on.

Lauri is known to the Estonian public as a the head economist of Swedbank. She has been working as the adviser for the Prime Minister since last spring and as such has been involved in the budgeting process. She has previously also worked for the Bank of Estonia and lectured at the universities.

Lauri is the member of Enterprise Estonia and the head of its internal audit unit. She holds a MSc in Economics from the University of Tartu.

Lauri joined the Reform Party last week but announced her decision only on Monday, saying that she wishes to run for the parliament as it needs to include more specialists.

Lauri was chosen over several other potential candidates, including previous Finance Minister Aivar Sõerd, but the Prime Minister said the decision was consensual.

“In a situation where the new finance minister won’t have time to settle in, it has to be someone who is already at home in the field. As the head economist of Swedbank, Lauri has exceptional inside knowledge of the area and for the past seven months as my economic adviser, she has gained first hand experience in the processes of state financing,” Rõivas said.

Lauri said she has more private sector experience that previous minister Jürgen Ligi and she will be much more subtle in her manners. But her financial principles are much the same as her predecessor’s – a balanced state budget, reduction of the tax burden and a simple taxation system.

Lauri’s candidacy has been welcomed by other parliamentary parties, who hold her in high regard as an economic specialist.

Jüri Ratas of the Center Party faction said that Lauri’s experience in the private sector is a good asset. “I think that a candidate who comes from outside the circle of politicians and politics, who has previously been an analyst in the private sector and is now working for the Prime Minister, can bring new outlooks to the state financing as well,” he said.

IRL’s Urmas Reinsalu said Lauri was a logical choice for the Reform Party. “I think it was reasonable, considering the tensions they have, to bring in a specialist instead of another politician and Maris Lauri is no doubt an eligible person,” he said, adding that the opposition will not work against her.

If the president approves Lauri’s candidacy for the position, the current government will have six female ministers in office. This would be a new record for Estonia.

Source: ERR News

Estonia is 62nd on the gender equality list

The World Economic Forum’s Global Gender Gap Report 2014, published today, measured gender equality among 142 countries. Estonia is placed 62nd overall, an all time low for the country.

The Global Gender Gap Index ranks 142 countries on the gap between women and men on health, education, economic and political indicators. Index scores can be interpreted as the percentage of the gap that has been closed between women and men, and allow countries to compare their current performance relative to their past performance. The rankings also allow for comparisons between countries.

According to the report the gender gap for economic participation and opportunity now stands at 60 percent worldwide. Estonia ranks 56th in this field but only 95th in terms of wage equality for similar work.

The global gap is narrowest, at 96 percent, in terms of health and survival with 35 countries having closed the gap entirely. Estonia is placed 37th.

Estonia has, however, closed the gap in educational attainment.

The gap for political empowerment, on the other hand, lags significantly behind. The overall score for this indicator is well below the sample average. Globally there are now 26 percent more female parliamentarians and 50 percent more female ministers than nine years ago. In Estonia, however, the numbers have stayed roughly the same. There are only 19 women in the 101-strong parliament.

Nordic countries remain the most gender-equal counties in the world. Iceland, Finland, Norway, Sweden and Denmark occupy the five top positions of the rankings. The top ten also include countries like Nicaragua, Rwanda and the Philippines. Of the closer neighbors, Latvia is ranked 15th, Lithuania 44th and Russia 75th. The least gender-equal counties are Chad, Pakistan and Yemen.

This year’s report is ninth in succession. The first report was published in 2006, when Estonia ranked 29th out of 115 countries. It received its highest overall score in 2009. The nine-year trend shows very little improvement.

Source: ERR News

Tallink owners plan to buy Estonian Air

According to the restructuring plan that will be submitted to the European Commission on Friday, Infortar, which is a joint owner of the Estonian shipping company Tallink, is also set to become the majority shareholder of Estonian Air.

If the revised restructuring program gets the Commission’s approval, Infortar is expected to invest in the national airline in the spring of 2015.

The changes in ownership also require the approval of the Estonian government.

“Estonia has been looking for opportunities to have a strong private investor among the owners of its national airline for the past three years,” said Ahti Kuningas, Chairman of the Supervisory Council. “Today we have an agreement with a partner who has by far the best vision for the future of the Estonian Air and excellent knowledge of the tourism industry.”

Infortar’s chairman of the management board, Ain Hanschmidt, said that his company wishes to deploy its extensive experience in tourism and service sectors, as well as its financial wherewithal for the benefit of Estonian Air, but this will no doubt be a major challenge.

“We see a few important possibilities for synergy with Tallink that should have an effect on the procurement prices, marketing and the sales network,” he said.

Estonian Air is Estonia’s national airline based in Tallinn at Lennart Meri International Airport. It own four Embraer 170 and three CRJ900 airplanes and operates flights on 10 regular routes, as well as a number of seasonal and charter flights.

Infortar is an investment company that relies on local capital. It owns 36 percent of Tallink Group and focuses on investments in the tourism, transport and real-estate sectors.

In 2013, Estonian Air suffered a deficit of 8.1 million euros. During the first six months of 2014 the airline had accumulated a 5-million-euro deficit.

Source: ERR News