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