Exports from Estonia amounted to 1 bEUR in November

According to Statistics Estonia, in November 2015, exports of goods decreased by 4% and imports stayed on the same level compared to November 2014. The decrease in exports was mostly influenced by a decrease in mineral products and electrical equipment.

In November 2015, exports from Estonia amounted to 1 billion euros and imports to Estonia to 1.1 billion euros at current prices. The trade deficit was 102 million euros and it increased by 35 million euros compared to November 2014.

The biggest share in Estonia’s exports in November was held by electrical equipment (21% of Estonia’s total exports), followed by agricultural products and food preparations (12%), and wood and products thereof (10%). The biggest decrease occurred in the exports of mineral products (down by 35 million euros) and electrical equipment (down by 30 million euros). The mineral products (incl. motor spirit, fuel oils, gas, electrical energy) exports were influenced the most by a decrease in quantity and in monetary value. Exports in the electrical equipment chapter were influenced the most by a decrease in the exports of data communications equipment. Compared to November 2014, the biggest increase occurred in the exports of miscellaneous manufactured articles and textiles and products thereof (up by 10 and 6 million euros, respectively).

In November, the main commodities imported to Estonia were electrical equipment (18% of Estonia’s total imports), agricultural products and food preparations (11%), mechanical appliances (10%), transport equipment (10%) and mineral products (10%). The drop in imports was influenced the most by a decrease in the imports of electrical equipment and mineral products (down by 27 and 18 million euros, respectively). The imports of electrical equipment were influenced the most by a decrease in communication equipment components. The imports of mineral products were influenced the most by a decrease in oil price.

The top destination country of Estonia’s exports in November was Sweden (18% of Estonia’s total exports), followed by Finland (16%) and Latvia (10%). The biggest decrease occurred in exports to Sweden, the USA and Spain (down by 25, 17 and 14 million euros, respectively). Exports to Sweden and Spain decreased mainly due to a decrease in the exports of electrical equipment. Exports to the USA decreased mainly due to a decrease in the exports of mineral products. At the same time, there was a significant increase in the exports to Finland and Lithuania (up by 13 and 7 million euros, respectively), mainly due to the exports of electrical equipment.

The main countries of consignment were Finland (15% of Estonia’s total imports), Germany (11%), Latvia (9%), Lithuania (9%) and Sweden (9%). The biggest decrease occurred in imports from Poland (down by 11 million euros), Finland and Russia (both down by 10 million euros). Imports from Poland decreased mainly due to a decrease in the imports of electrical equipment; imports from Finland and Russia decreased due to the decreased imports of mineral products. At the same time, the greatest increase occurred in the imports from Lithuania (up by 17 million euros).

Read more from Statistics Estonia

The population of Estonia decreased last year

According to the initial estimates of Statistics Estonia, the population number of Estonia as at 1 January 2016 was 1,311,800, which is 1,500 persons fewer than at the same time a year ago.

The population decreased by 1,400 due to negative natural increase (the number of deaths exceeded the number of births) and by 100 due to negative net migration (more persons emigrated from than immigrated to Estonia). In total, the population of Estonia decreased by 0.1% in 2015. The previous time the population decreased by less than 2,000 persons was 6 years ago but back then the main reason for this was the elevated natural increase. In 2015, net external migration was at its highest level since the restoration of independence in Estonia.

According to initial data, nearly 14,000 children were born in Estonia in 2015, which is nearly 400 children more than in 2014. Considering that the number of women in childbearing age has decreased, there were more children born per woman in 2015 than the year before, according to preliminary estimates. There were 15,400 deaths in 2015. The number of deaths has remained at this level for five years in a row, varying by just +/-100. As the population is ageing and the number of elderly persons increases year after year, it can be presumed that life expectancy will continue to increase.

In 2015, 6,600 persons immigrated to and 6,700 persons emigrated from Estonia, according to preliminary estimates. Based on those figures, it can be said that the Estonian foreign migration was balanced. Migration statistics are most difficult to estimate based on preliminary data, as Statistics Estonia supplements migration figures with data from additional sources and reaching the final result is more complicated compared to other events, both technically and methodologically. The current result is based on the changes in place of residence which were registered in the Population Register in 2015. Here, in the case of immigration, the previous place of residence, and in the case of emigration, the new place of residence is in a foreign country. Persons who have been issued a residence permit in 2015 for at least a year and whose country of origin is unknown as of yet have been added to these data.Diagram: Population change, 2000–2015

Population statistics are based on the population number of the 2011 population census, which has been adjusted for under-coverage. This number is adjusted annually with the data on registered vital events – births, deaths and changes of residence (migration). Starting from the 2000 population census, under-coverage has been added to the enumerated persons in population statistics. The period between the two last censuses has also been adjusted taking into account unregistered migration.

The initial population number is based on initial data on births, deaths and migration. Statistics Estonia will publish the revised population number on 4 May 2016 and the revised migration data on 25 May 2016.

Source: Statistics Estonia

The construction price index increased in 2015

According to Statistics Estonia, in 2015, the construction price index rose 0.5% compared to the average of 2014.

Labour costs increased by 2.9%, costs of building machines decreased by 0.8% and costs of building materials decreased by 0.7%.

In the 4th quarter of 2015 compared to the 3rd quarter, the change of the construction price index was -0.1% and compared to the 4th quarter of 2014 the change was 0.7%. Compared to the 3rd quarter of 2015, the index was mainly influenced by the depreciation of building materials, which gave more than half of the quarterly change. Compared to the 4th quarter of 2014, the construction price index was also mainly influenced by an increase in labour costs, which accounted more than 75% of the total increase.

The repair and reconstruction work price index remained at the same level in 2015 compared to the average of 2014. Labour costs increased by 2.3%, costs of machines decreased by 2.3% and costs of building materials decreased by 1.4%.

The change of the repair and reconstruction work price index in the 4th quarter of 2015 was -0.1% compared to the 3rd quarter, and -0.2% compared to the 4th quarter of 2014.

The calculation of the construction price index covers four groups of buildings: detached houses, blocks of flats, industrial buildings and office buildings. The repair and reconstruction work price index covers office buildings. The construction price index expresses the change in the expenditures on construction taking into consideration the price changes of three basic inputs: labour force, building materials and building machines.

Change in the construction price index, 4th quarter 2015
3rd quarter 2015 – 4th quarter 2015, % 4th quarter 2014 – 4th quarter 2015, %
TOTAL -0.1 0.7
labour force 0.4 3.7
building machines -0.5 -1.9
building materials -0.3 -0.7
Index of detached houses 0.1 0.5
Index of blocks of flats 0.1 -0.4
Index of industrial buildings -0.5 0.9
Index of office buildings 0.0 0.9

 

Change in the repair and reconstruction work price index, 4th quarter 2015
3rd quarter 2015 – 4th quarter 2015, % 4th quarter 2014 – 4th quarter 2015, %
TOTAL -0.1 -0.2
labour force 0.4 2.5
building machines -0.5 -3.1
building materials -0.3 -1.9

Source: Statistics Estonia

Relatively low investment activity in Estonia

  • Relatively low investment activity meant that savings grew faster than debt liabilities did
  • Corporate profits have fallen and both resident and non-resident owners have increased dividend payouts
  • The income and savings of households have increased faster than their debt liabilities

The saving of Estonian households, companies and general government was more in the third quarter of last year than their investment and so the Estonian economy as a whole was a net lender to the rest of the world. This means that as in the past six years, more funds were invested abroad or returned there than were taken in from abroad. Relatively low investment activity meant that savings again grew faster than debt liabilities did

The debt liabilities of non-financial companies increased in the third quarter by around 2% over the year. Annual growth in short-term corporate loan liabilities remained relatively fast at around 7% a year. Growth was fast mainly because company inventories and the turnover of retail companies were growing. The liquid financial assets of companies, in the form of cash, deposits, short-term loan assets and securities, increased at the same time by around 7%.

Corporate equity has decreased slightly in recent years. Corporate profits have fallen and both resident and non-resident owners have increased dividend payouts. In consequence, reinvested earnings have shrunk, and the rapid growth in equity that followed the economic crisis has come to an end. The level of capitalisation in the Estonian corporate sector is still quite high in international comparison.

The income and savings of households are still increasing faster than their debt liabilities. Higher incomes helped the cash and deposits of households to increase by around 9% to 6.5 billion euros. Debt liabilities increased by 4.5% to 8.1 billion euros at the same time. Loan growth is mainly being led by growth in long-term housing loans, but there has also been an increase in the volume of car leases.

Source: Bank of Estonia

Author: Taavi Raudsaar, Economist at Eesti Pank

Energy kept prices moving downwards in 2015

  • 2015 was a year of a sharp fall in commodities prices
  • The majority of the fall in prices in Estonia came from five goods: motor fuels, heating energy, electricity, meat products and dairy products
  • Inflation will be pushed up from February by tax rises

Data from Statistics Estonia show that the consumer basket was 0.9% lower in price in December than a year earlier and 0.7% lower than in November. The price level in Estonia fell by 0.5% over the whole of 2015. Harmonised consumer price inflation for the euro area was 0.2% in December and early estimates suggest that prices did not change over the whole year in the euro area.

The year 2015 was one of a sharp fall in commodities prices as food prices were down 19% on global markets and the oil price fell 47% over the year. A large role in the fluctuation of prices has been played by the development of oil technology and the advances in shale oil, increased oil production, favourable weather, and slower growth in emerging markets that has led demand for commodities to be weaker than expected. The mismatch between demand and supply means that commodities prices may fall further, but prices are already at the level of the middle of the last decade and there is little room for them to descend much more.

The fall in prices in Estonia in 2015 was narrowly based, with the majority of it coming from only five goods: motor fuels, heating energy, electricity, meat products and dairy products. Cheaper prices for those goods had a major impact on the consumer price index though, as they account for about one quarter of the consumer basket. The remainder of the consumer basket rose in price by 1.4% last year.

Food other than alcohol and tobacco was down 0.5% in price during 2015 and the fall in the prices of dairy and meat products was one of the largest in the European Union. Producer and consumer prices for food in Estonia have previously moved more in line with the cycle of rises and falls on the global market than have those in most other European Union countries. It may be expected in consequence that if food prices start to rise on global markets, food price inflation will be higher in Estonia than the average in the euro area.

The decline in the oil price at the start of the new year will restrain prices from starting to rise in the early months of the year at least. Inflation will be boosted from February by the rise in excise on motor fuels and alcohol. Rises in excise will lift inflation by around 0.7 percentage point, though the rise in excise on tobacco in June will only be felt in retail prices in the second half of the year because of stocks built up in warehouses. The impact of administrative factors will be further increased in the second half of the year when the effect of the introduction of free higher education passes out after three years during which it has held inflation down by 0.3-0.4 percentage point. Taking all these factors together, consumer prices will increase slowly in 2016, with the price level forecast to rise by 1.2%.

Source: Bank of Estonia

Author: Rasmus Kattai, Economist at Eesti Pank