The production of industrial enterprises rose 8 pct

According to the preliminary data of Statistics Estonia, in 2017, the production of industrial enterprises rose 8% compared to the previous year. Production volume increased in energy, mining and manufacturing.

In 2017, the total production in manufacturing was 7% higher than in 2016. In more than two thirds of the branches of industry, production surpassed the volume of the previous year. The growth in production was mostly due to an increase in the manufacture of wood products, food products, metal products and electrical equipment. Among the branches of industry with larger shares, production fell in the manufacture of electronic equipment and furniture.

In 2017, 67% of the total production of manufacturing was sold on the external market. Export increased 5% and sales on the domestic market increased 10% compared to 2016.

In December 2017, the working-day adjusted industrial production increased 7% compared to December 2016; the production of manufacturing rose 7%. In December 2017 compared to December 2016, the production of electricity decreased 6% and the production of heat increased 2%.

In December 2017 compared to November, the seasonally adjusted industrial production increased 3%; the production of manufacturing increased 1%.Volume index of production in manufacturing and its trend, January 2008 – December 2017

Read more from Statistics Estonia

The turnover of retail trade enterprises was 654.5 mEUR in December

According to Statistics Estonia, in December 2017, compared to December 2016, the turnover of retail trade enterprises increased 1% at constant prices.

In December 2017, the turnover of retail trade enterprises was 654.5 million euros.

The turnover of stores selling manufactured goods increased 7% compared to December 2016. Turnover increased in most economic activities, except in non-specialised stores selling predominantly manufactured goods (e.g. department stores) where turnover was smaller than in December 2016. Turnover increased the most in stores selling via mail order or the internet, with sales increasing 26% in a year. A higher than average increase in turnover occurred also in stores selling household goods and appliances, hardware and building materials (growth 13%) and in stores selling second-hand goods and in non-store retail sale (stalls, markets, direct sale) (growth 9%).

The turnover of grocery stores decreased 3% compared to December 2016. The turnover fall of these stores was affected by the continuing price increase of food products.

The turnover of enterprises engaged in retail sales of automotive fuel stayed at the same level as in December 2016.

Compared to November 2017, in December the turnover of retail trade enterprises increased 18%. This is a usual rise in December, when Christmas and turn-of-the-year sales take place.

According to preliminary data, the turnover of retail trade enterprises was 6.7 billion euros in 2017. Compared to 2016, turnover increased 1.5%.Turnover volume index of retail trade enterprises and its trend, January 2007 – December 2017

The statistics are based on the VAT declaration data of the Estonian Tax and Customs Board.Statistics Estonia published the monthly summary in four working days. For the statistical activity “Economic indicators of trade enterprises”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia performs this statistical activity.

Source: Statistics Estonia

Card transactions are driving the growth in the number of payments

  • The number of international payments rose faster in the final quarter of last year than the number of domestic payments did
  • The majority of domestic payments are card payments
  • The rise in the numbers of domestic and international payments was largely driven by card payments

Estonian residents and companies made an average of 1.34 million payments per day in the fourth quarter of 2017. The total turnover of payments per day was 558 million euros. Residents of Estonia are using bankcards more and more in shops at home and abroad and in online stores.

Domestic payments accounted for 91% of the number of payments and 72% of the turnover. That is equal to 1.2 million payments per day and a total turnover of 399 million euros. Domestic payments are those where both the buyer and the seller are in Estonia and 7% more such payments were made in Estonia than in the same quarter of the previous year. Some 65% of all domestic payments are made by card at the point of sale.

International payments accounted for 9% of the number of payments and 28% of the turnover, totalling 114,000 payments with turnover of 159 million euros. This covers payments for which the payment order is sent to a bank outside Estonia, a card payment is made abroad, or a card is used to pay in a foreign online store. At 82%, most of the international payments are card payments, and 29% more international payments were made than a year earlier.

The rise in the numbers of domestic and international payments was largely driven by card payments. Among international payments, the rise in the number made with cards over the internet stands out particularly. Cards were used abroad for purchases an average of 36,000 times a day in the fourth quarter, which was 32% more than in the same quarter of the previous year. Where available, a bank link is the preferred method of payment for Estonian online stores (1). Cards were used for 5200 purchases per day in Estonian online stores in the fourth quarter, which was 2.5 times more than in the same quarter of 2016. Bank links were used for 59,000 purchases a day in the quarter though, which was 9% more than a year earlier.

A total of 100,000 purchases were made each day in the fourth quarter through bank links and by card over the internet. However, not all purchases made through bank links are necessarily classified as e-commerce in the standard sense. An estimated 20% of purchases through bank links are of goods, 30% are of services, mainly bus and other transport tickets and cinema, theatre and concert tickets, 25% are of lottery tickets and other forms of online gambling and betting, and 25% are payments of bills and payments for financial services such as insurance or loan repayments or other payments.

Bank links can only be used for purchases from Estonian online stores. Statistics from the postal service Omniva confirm the rapid growth of e-commerce as Omniva said that the use of parcel machines in December 2017 was up 50% on December 2016. The country that is the source for the largest share of parcels is China, and the USA, the United Kingdom and Germany are also popular countries of origin.

Read more from Bank of Estonia website

Source: Bank of Estonia

Author: Tiina Soosalu, Eesti Pank Payment and Settlement Systems Department

Good yield slightly compensated for harvesting losses

According to Statistics Estonia, the average yield of cereals was 3,967 tonnes per hectare in 2017. This is a very good result given the weather conditions in the previous year.

The total cereal production in 2017 was 1,311,900 tonnes, of which 713,300 tonnes was wheat, 425,700 tonnes barley and 52,400 tonnes rye. The average yield per hectare was 4,202 kilograms for wheat, 4,154 kilograms for barley and 3,932 kilograms for rye.

In 2017, the sown area of cereals was smaller than the year before. Cereals were grown on a total of 330,700 hectares, which is 5.9% less than in the preceding year. The sown area of wheat was 169,800 hectares, which is 3.2% more than in 2016. The sown area of barley decreased by 24.2% and amounted to 102,500 hectares. The sown area of rye increased by 7.3% compared to the preceding year and was 13,300 hectares.

The production of legumes was 75,300 tonnes, which is 31.2% less than in 2016. The average yield was 1,149 kilograms of legumes per hectare. Legumes were sown on 65,500 hectares, which is 18.2% more than in 2016. This is also the largest sown area of legumes ever.

The production of rape and turnip rape seed was 165,300 tonnes. In 2017, rape and turnip rape were sown on 73,800 hectares. The average yield was 2,240 kilograms of rape and turnip rape seed per hectare.

The production of potatoes was 91 200 tonnes, which is 1.6% more than the year before. The sown area of potatoes was 5,400 hectares in 2017. The average yield of potatoes was 16,925 kilograms per hectare.

The statistics are based on the Estonian Agricultural Registers and Information Board (ARIB) land use data and statistical questionnaire “Crop production”, the deadline of which was 1 November 2017. Statistics Estonia published the yearly summary of the data in 58 working days. For the statistical activity “Crop production”, the main representative of public interest is the Ministry of Rural Affairs, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting this statistical activity.

Source: Statistics Estonia

Deposits at banks grew by 9% over the year

  • The borrowing activity of Estonian companies and households increased last year
  • The average interest rate on corporate loans fell over the year but the rate on household loans rose a little
  • Deposits at banks grew by 9% over the year
  • The profits of the banking sector were supported by an increase in net interest income

Borrowing by Estonian companies from banks operating in Estonia increased in the fourth quarter of 2017. Investment in fixed assets increased last year, which was reflected in an increase in borrowing activity. The amount taken from banks operating in Estonia in new loans and leases was 10% larger in the fourth quarter than a year earlier. In total 881 million euros were taken out in long-term loans, which was 12% more than a year ago, most of them to companies in real estate, construction, transport or manufacturing. The stock of the corporate loan portfolio was smaller than in the fourth quarter of 2016 however, as one bank transferred a part of its loans to the portfolio of its foreign parent bank. Without this the portfolio of corporate loans, leases and factoring would have grown by around 6% over the year.

Borrowing by households also increased last year as incomes rose strongly and interest rates stayed low. The main growth was in housing loans and in the car lease portfolio. The value of new housing loans taken last year was 16% more than in 2016, and the portfolio increased by 6.6% over the year to 7 billion euros. The amount taken in new car leases was 20% more than in 2016, and the portfolio of leases increased by 16% over the year to 557 million euros. Overdrafts and credit card loans grew relatively modestly though, by 2.3% over the year.

The average interest rates on new loans fell in the fourth quarter of 2017. There is tight competition between banks in the corporate loan market, and this led the average interest rate on new long-term loans to companies to fall in December to below 2%. The average interest rate on new housing loans also fell in the fourth quarter having climbed in the first half of the year. The average interest rate on new housing loans issued in December was 2.3%, which is still a little higher than it was a year earlier.

The favourable economic environment and low interest rates have meant that the volume of overdue loans has shrunk. The value of loans overdue by more than 60 days in the loan portfolio had fallen to 141 million euros by the end of the year, or 0.9% of the total portfolio. The volume of overdue loans declined in most sectors. The banking sector has also made provisions of 124 million euros against possible loan losses in the future, covering 89% of the loans overdue by more than 60 days.

The deposits of Estonian companies and households grew by 9% over the year to 13 million euros. The growth in corporate deposits slowed a little in the second half of last year, but it still remained fast at 8.4% in December. Increased investment can lead to slower growth in the liquid assets of companies and so in deposits. The growth of household deposits accelerated somewhat last year, reaching a rate of 10% at the end of the year, which is the largest growth of recent years.

The banking sector earned net profit of 335 million euros in the year, which was 6% less than in 2016. Profits mainly declined because the dividend income earned from subsidiaries dropped, having been large in 2016 as undistributed profit from earlier years was paid out. Without dividend income, net profit in 2017 would have been about 13% more than a year earlier. Profit was mainly aided by the growth in the loan portfolio, which raised interest income, and by the good quality of the portfolio. About the same amount was earned in net service fee income as in 2016.

Read more from Bank of Estonia website

Author: Mari Tamm, Economist at Eesti Pank

Households borrowed more than previously from the banks and less from elsewhere

  • Higher incomes have increased the numbers of loan clients and of those able to save
  • Estonian companies largely used their own resources to fund investment in fixed assets
  • The growth in long-term corporate loans picked up a little, but the growth in short-term loans slowed

As demand for credit is strong, the loan liabilities of households have grown strongly. Demand for loans is supported by rapid growth in incomes, high levels of confidence and very low interest rates. The loan liabilities of households increased in the third quarter at about the same rate as wages at around 7% over the year. The stock of bank loans and leases has grown more quickly in recent quarters, but the previously very strong growth in loans from other lenders, including instant loan providers, has slowed. This is probably partly because the banks have started to issue more consumption loans and leases, and also because more effective supervision has been introduced over the operations of other lenders.

Higher incomes have made it more possible for people in Estonia to save, and savings continue to grow fast. Household deposits increased by 9% over the year, and other household financial assets like cash, securities, investment fund units and loans given out grew even faster. Despite the rapid growth, the financial savings of Estonian households in relation to incomes are still below the European Union average, and many households would not have sufficient savings to cover unexpected events.

Although investment in fixed assets increased strongly in 2017, companies in Estonia were able to use their high levels of liquid assets and own funds for most of the financing. More was taken out in long-term loans than before, and the growth over the year was a little over 5% in the third quarter of last year. At the same time the stock of short-term loans shrank sharply, largely reflecting the cash flow management of some foreign-owned companies. Total corporate debt liabilities were up 1% on a year earlier. The stock of loans taken from banks operating in Estonia declined in the third quarter of last year and the stock of loans taken from abroad increased by the same amount as one bank moved a part of its loans into the portfolio of its foreign parent. Foreign investment in equity in Estonia increased, but this largely reflects the growth in reinvested income that stems from growth in profits rather more than additional foreign investment.

The Estonian economy was a net lender to the rest of the world in the third quarter of 2017, as residents of Estonia invested more financial assets abroad than they received from there. This shows that the trend of recent years for Estonian residents to save is continuing and the level of investment in fixed assets is still relatively low despite the recent growth in the past couple of quarters.

Source: Bank of Estonia

Author: Taavi Raudsaar, Economist at Eesti Pank

10 pct more tourists in November

According to Statistics Estonia, 236,000 domestic and foreign tourists stayed in the accommodation establishments of Estonia in November 2017, i.e. 10% more than in November 2016.

139,000 foreign tourists and 97,000 domestic tourists used the services of accommodation establishments. There were 7% more foreign tourists and 13% more domestic tourists staying in accommodation establishments than in November 2016. Tourist numbers from most of the European Union countries increased. There were also more tourists from Russia and Asian countries. The number of Finnish tourists, who accounted for 42% of the total number of foreign tourists in accommodation establishments, decreased by 7% compared to November 2016.

104,000 foreign tourists, i.e. 75% of the foreign tourists who used accommodation services, stayed in the accommodation establishments of Tallinn. The next most popular destinations were Pärnu and Tartu cities, where respectively 7% and 6% of the accommodated foreign tourists stayed. 5% of the foreign tourists stayed in the accommodation establishments of Ida-Viru county. 61% of foreign tourists were on a holiday, 30% on a business trip and the rest had some other reason for visiting Estonia.

41% of the customers of accommodation establishments were domestic tourists. 60% of them were on a holiday trip and 28% on a business trip. 28% of the accommodated domestic tourists stayed in Harju county, 15% in both Tartu county and Pärnu county and 11% in Ida-Viru county.

In November 2017, 968 accommodation establishments offered their services. 20,000 rooms and 46,000 bed places were available for tourists. 42% of the rooms and 31% of the bed places were occupied. The average cost of a guest night was 38 euros, which is two euros more than in November 2016. The average cost of a guest night was 46 euros in Harju county, 36 euros in Tartu county, 31 euros in Ida-Viru county and 26 euros in Pärnu county.

Read more from Statistics Estonia