The production of industrial enterprises increased 13 pct compared to May last year

According to Statistics Estonia, in May 2017, the production of industrial enterprises increased 13% compared to May of the previous year. Production increased in the energy sector and mining and quarrying as well as in manufacturing.

In May, manufacturing production was 8% higher compared to the corresponding month of 2016. Production growth was broad-based – in May, production surpassed the volume of May 2016 in two-thirds of the branches of industry. The growth in production was mostly due to an increase in the manufacture of wood, metal and food products and electrical equipment. Production increased also in the manufacture of motor vehicles, machinery and equipment and building materials. Among the branches of industry with larger shares, production fell only in the manufacture of electronic products.

In May, 67% of the total production of manufacturing was sold to the external market. According to unadjusted data, the sales of manufacturing production for export increased 7% and sales to the domestic market 15% compared to May 2016.

In May 2017, the seasonally adjusted total industrial production remained on the level of the previous month but production in manufacturing fell by 2%.

Compared to May 2016, the production of electricity increased 69% and the production of heat 26%.

Volume index of production in manufacturing and its trend

Read more from Statistics Estonia

Last year’s cereal production was the lowest in five years

According to the preliminary data of Statistics Estonia, cereal production was 934,100 tonnes in 2016, which is the lowest yield of the previous five years.

Total cereal production included 455,500 tonnes of wheat, 357,400 tonnes of barley and 32,400 tonnes of rye. The average yield per hectare was 2,658 kilograms of cereals, whereas the average yield for wheat was 2,769 kilograms, for barley 2,641 kilograms and for rye 2,616 kilograms.

In 2016, the sown area of cereals was very close to that of the previous year. Cereals were grown on a total of 351,400 hectares, which is 0.3% more than in the previous year. The sown area of wheat was 164,500 hectares, which is 3% less than in the previous year. The sown area of barley increased by 3% and amounted to 135,300 hectares in 2016. The sown area of rye decreased by 13% and amounted to 12,400 hectares.

The production of legumes was 109,500 tonnes, which is 27% more than in 2015. The average yield was 1,975 kilograms of legumes per hectare. Legumes were sown on 55,400 hectares, which is 77% more than the year before and also the largest sown area of legumes ever.

The yield of rape and turnip rape seed was 102,500 tonnes. In 2016, rape and turnip rape were sown on 70,100 hectares. The average yield was 1,462 kilograms of rape and turnip rape seed per hectare.

The production of potatoes amounted to 89,800 tonnes, which is 23% less than the year before. The sown area of potatoes was 5,600 hectares in 2016. The average yield of potatoes was 15,920 kilograms per hectare.

Source: Statistics Estonia

The construction price index fell in 2016

According to Statistics Estonia, in 2016, the construction price index fell 0.8% compared with the average of 2015.

Compared to 2015, labour costs increased by 1.2%, the cost of machines decreased by 1.1% and the cost of materials decreased by 1.8%.

In the 4th quarter of 2016 compared to the 3rd quarter, the change of the construction price index was 0.2%, and compared to the 4th quarter of 2015 the change was -0.5%. Compared to the 3rd quarter of 2016, the index was mainly influenced by an increase in labour costs, which contributed more than half of the quarterly change. Compared to the 4th quarter of 2015, the construction price index was mainly influenced by the depreciation of building materials, which accounted for more than 75% of the total decrease.

The repair and reconstruction work price index decreased by 0.9% in 2016 compared to the average of 2015. Labour costs increased by 0.8%, the cost of machines decreased by 1.6% and the cost of building materials decreased by 2.1%.

The change of the repair and reconstruction work price index in the 4th quarter of 2016 was 0.3% compared to the 3rd quarter and -0.4% compared to the 4th quarter of 2015.

The calculation of the construction price index covers four groups of buildings: detached houses, apartment buildings, industrial buildings and office buildings. The repair and reconstruction work price index covers office buildings. The construction price index expresses the change in the cost of construction at the level of direct costs at a construction site. The resources taken into account in direct costs are divided into three main groups: labour force, building machines and building materials.

Change in the construction price index, 4th quarter 2016
3rd quarter 2016 – 4th quarter 2016, % 4th quarter 2015 – 4th quarter 2016, %
TOTAL 0.2 -0.5
labour force 0.3 0.3
building machines 0.4 0.0
building materials 0.1 -1.0
Index of detached houses 0.2 -0.1
Index of apartment buildings 0.2 -0.2
Index of industrial buildings 0.2 -0.5
Index of office buildings 0.1 -0.6
Change in the repair and reconstruction work price index, 4th quarter 2016
3rd quarter 2016 – 4th quarter 2016, % 4th quarter 2015 – 4th quarter 2016, %
TOTAL 0.3 -0.4
labour force 0.3 0.2
building machines 0.1 0.1
building materials 0.3 -0.9

For the statistical activity “Construction price index”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting this statistical activity.

Source: Statistics Estonia

The population of Estonia increased in 2016

According to the initial estimates of Statistics Estonia, the population number of Estonia as at 1 January 2017 was 1,317,800, which is 1,850 persons more than at the same time a year ago.

The population decreased by 1,370 due to negative natural increase (the number of deaths exceeded the number of births) and increased by 3,220 due to positive net migration (more persons immigrated to Estonia than emigrated). In total, the population of Estonia increased by 0.14% in 2016. The population of Estonia has increased for two years already, because immigration has been higher than emigration and negative natural increase.

More than 13,900 children were born in Estonia in 2016. The number of births has remained at approximately the same level for five years. Considering that the number of women in childbearing age has decreased, it could be seen as good news, but there is still a long way to go before really good news in births statistics.

There were 15,300 deaths in 2016. The number of deaths has remained at this level for six years in a row, varying by just +/-150. As the population is ageing and the number of older people increases year after year, it is expected that life expectancy will continue to increase.

In 2016, there were 9,100 persons who immigrated to Estonia and 5,800 persons who emigrated. Migration statistics are most difficult to estimate based on preliminary data, as Statistics Estonia supplements migration figures with data from additional registers and later also adds unregistered migration according to the methodology of calculating population based on residency index: if a person changes from resident to non-resident, it is emigration, and in the contrary case, it is immigration (if it is not births or deaths). Reaching the final result is more complicated compared to other events, both technically and methodologically, and can significantly increase migration flows. Emigration increases mainly due to unregistered leaving of European Union and Estonian citizens. Immigration increases mainly due to return migration of Estonian citizens, which is also not registered, as the prior leaving was not registered. Compared to immigration, emigration is less registered knowingly or unknowingly, and therefore, emigration increases presumably more than immigration in the revised population number.

Population change, 2000–2016

The current outcome is based on changes of residence in the population register in 2016 – persons whose residence was not Estonia at the previous year-end but was so at this year-end are considered immigrants, and the persons whose residence was Estonia at the previous year-end but not at this year-end are considered emigrants.

Source: Statistics Estonia

Prices increased by 0.1 pct in 2016

Consumer price index increased by 0.1% in 2016. Higher excise taxes on alcohol, tobacco, and motor fuels contributed positively, while cheaper energy had the biggest negative impact on prices. The prices of alcoholic beverages and tobacco were around 6% higher than in 2015.

Heat energy were 9%, pipeline gas 20%, and motor fuels 4% cheaper than in 2015. Nevertheless, due to a gradual rise in oil prices since January 2016, and a hike in excise taxes in February 2016, the prices of motor fuels have started to rise. In December 2016, gasoline and diesel prices were already 16% higher than one year before.

In 2017, inflation in Estonia is expected to accelerate to around 3%, due to more expensive commodities, and new rounds of excise tax hikes on alcohol, tobacco, and fuels. In 2014-2016 average price level remained flat in Estonia, prices increased last time in 2013 (+2.8%).

Source: Swedbank

EIB provides EUR 400m to support strategic investments in Estonia

The European Investment Bank (EIB) and the Estonian Ministry of Finance have signed the second tranche – worth EUR 400 million – of the co-financing facility for Estonia to support investments in research and innovation, sustainable transport infrastructure, and promoting the development of SMEs. This loan from the Bank will help Estonia in the successful absorption of the EU structural funds over 2014 – 2020, the first EUR 200 million tranche of the facility was signed in December 2014.

Sven Sester, Minister of Finance of Estonia, said: „The Estonian government has decided to increase investments in order to improve the competitiveness of the Estonian economy. There is no doubt that EU structural funds have a positive impact on the Estonian economy. In order to support investments that improve competitiveness and bring long-term benefits, we are prepared to use external financing. Loans will not be used to cover running costs, such as paying wages or allowances. The government is firm in our determination to adhere to European budget rules that rule out unsustainable deficits.”

Jan Vapaavuori, EIB Vice-President responsible for lending in Estonia, said: “The EIB has always been a reliable partner for Estonia. We are pleased to now be able to continue our close cooperation with the Estonian authorities with this second and last tranche of the co-financing facility. The combined use of EIB loan and EU grant money supports sustainable economic growth and helps further improve the quality of life for the people of Estonia.”

The EUR 400 million loan will be available as a co-financing for selected projects under the Estonian operational programme for the Cohesion Policy Funds and the Rural Development Programme for 2014 – 2020. The EU structural funds will meet a fixed percentage of the costs of eligible projects, with the remaining part being covered from the State Budget or by drawing on this facility from the EIB. It will primarily support projects in the following sectors: research, technological development and innovations; transport, water and environmental protection, as well as infrastructure development in rural areas.

The facility will furthermore focus on investments in education, and health-care, as well as in improving training and access to employment. These investments will contribute to the further development of a knowledge-intensive and internationally competitive economy, a clean environment and a sustainable transport infrastructure, which in turn will help to create the conditions for smart, sustainable and inclusive growth.

This loan is a continuation of the long-standing partnership between the EIB and Estonia, with the Bank of the European Union having already lent EUR 550m within a similar EU funds co-financing facility covering the period from 2007 up to 2013. To obtain an EU grant for an eligible project, the (Estonian) government must provide the co-funding. While in a large part the co-funding will be provided from budget funds, the EIB facility will be available to supplement these funds and to ensure that Estonia uses as much of the available EU funding as it can.

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. In 2011-2015, the EIB provided loans in Estonia totalling nearly EUR 740 million.

Source: Estonian Ministry of Finance

Standard and Poor’s affirms AA- rating on Estonia

The international ratings agency Standard and Poor’s has affirmed its AA- long-term foreign and local currency sovereign credit rating on the Republic of Estonia. The outlook of the rating is stable.

The short-term rating was affirmed at A-1+ with a stable outlook.

The S&P ratings are the highest granted to Estonia. Fitch and Moody’s rate Estonia at A+ and A1 respectively. A credit rating reflects the agency’s assessment on the government’s ability to honour debt obligations in the future.

S&P does not expect the recent change of government to undermine Estonia’s key credit strengths, including strong public finances and effective policymaking.

The agency expects prudent fiscal policy to remain in place following the change of government, and further expects the government to continue the focus on EU commitments, regional security, and energy supply diversification.

S&P understands that the new coalition will continue the ongoing government reform to consolidate local and regional governments by reducing the number of entities and increasing economic development focus and initiatives for the regions.

Economic growth in Estonia is expected by S&P to accelerate to 2.4 per cent in 2017 and to an average of 2.3% over 2016-2019. Growth in 2016 is estimated at 1.4 per cent.

For further information, see the press release by Standard and Poor’s (registration required).

Source: Estonian Ministry of Finance