One-off transactions pulled the current account into deficit in January 2017

The flash estimate1 put the Estonian current account at 251 million euros in deficit in January 2017. The cause of the deficit was large one-off import transactions for transport vehicles. The deficit on the goods and services account was 240 million euros. Goods exports grew by 9% and goods imports by 39%, so the deficit on the goods account widened to 342 million euros. Exports of services increased by 12% and imports by 10%, so the surplus on the services account was larger than a year previously at 102 million euros. The net outflow on the primary and secondary income accounts totalled 11 million euros, which was 36 million euros less than a year earlier.

The current and capital accounts were in deficit by a total of 220 million euros in January, meaning Estonia was a net borrower from the rest of the world. Loan liabilities increased and other investment assets were reduced in order to finance the deficit.

1 The quarterly balance of payments is compiled from a combined system of representative primary data sources, including surveys of companies, while the monthly balance of payments draws from a considerably smaller database. Although the monthly report uses as much data available for the month reported as possible, including administrative data sources and reports on international payments, it is subjective to a certain degree, which is why it is called an estimate. Once the quarterly balance of payments is released, the monthly balances of payments are adjusted accordingly. For more on the principles used in compiling the flash estimate, see http://statistika.eestipank.ee/failid/mbo/kiir_mb_eng.html

Eesti Pank publishes the flash estimate of the balance of payments monthly for the last month but one. Eesti Pank will publish the balance of payments for the first quarter of 2017 on 8 June 2017.

Statistical releases are published by Eesti Pank together with statistical data. The release is independent of economic policy releases and is presented separately from them.

 

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Source: Bank of Estonia

Foreign trade continued to grow in January

According to Statistics Estonia, in January 2017, the exports of goods increased by 14% and imports by 40% compared January 2016. The rise in exports was affected the most by an increase in the exportation of mineral products, and the rise in imports by non-recurring big-volume transactions with transport equipment.

In January 2017, exports from Estonia amounted to 0.9 billion euros and imports to Estonia to 1.4 billion euros at current prices. The trade deficit was 430 million euros (in January 2016, it was 155 million euros). The main reason for the record trade deficit is non-recurring transactions with transport equipment. Without these transactions, imports increased 12% and trade deficit was 164 million euros.

The top destination countries of Estonia’s exports in January were Finland (15% of Estonia’s total exports), Sweden (15%) and Latvia (9%). The biggest increase occurred in exports to the Netherlands (up by 25 million euros, i.e. two-fold), Finland (up by 16 million euros) and Germany (up by 15 million euros). These rises are mainly due to increased exports of mineral products to the Netherlands, of agricultural products and food preparations to Finland and of electrical equipment to Germany. Exports to Sweden decreased the most.

The biggest share in exports was held by electrical equipment, followed by wood and articles of wood and mineral products. The increase in exports was affected by the exports of mineral products (up by 39 million euros) and base metals and articles of base metal (up by 27 million euros). There was a decrease in the exports of mechanical appliances.

The share of goods of Estonian origin in total exports was 73%. In January 2017 compared to January 2016, the exports of goods of Estonian origin grew 14%, while re-exports, i.e. the exportation of goods imported from a foreign country, increased 12%. The rise in the exports of goods of Estonian origin was affected the most by an increase in the exports of base metals and articles of base metal (incl. ferrous waste and scrap), wood and articles of wood (incl. planed coniferous wood) and mineral products (incl. shale oil, fuel oil). Goods of Estonian origin are exported the most to Sweden, Finland and Germany. The biggest increase in the exports of goods of Estonian origin was in the exports to Germany (up by 13 million euros) and decrease in the exports to Sweden (down by 23 million euros).

The main countries of consignment in January 2017 were Finland (27% of Estonia’s total imports), Lithuania (10%), Germany (8%) and Russia (8%). The biggest increase occurred in imports from Finland (up by 226 million euros, i.e. about three-fold) and Russia (up by 44 million euros), while imports from Hungary decreased the most (down by 4 million euros).

In January, the main commodities imported to Estonia were transport equipment, electrical equipment and mineral products. The growth in imports was affected the most by an increase in the imports of transport equipment (incl. ships), mineral products (incl. motor spirit) and base metals and articles of base metal (incl. flat-rolled products). The biggest fall occurred in the imports of mechanical appliances.

In January 2017, foreign trade export volume index increased by 2% and import volume index by 12% compared to the same period of the previous year.Estonia’s foreign trade by month, 2014–2017

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Exports led to a record surplus on Estonia’s current account in 2016

  • The current account surplus for 2016 was the largest since independence was regained at 2.7% of GDP
  • Reinvested income is preferred to new money for use in investment
  • The net international investment position continued to improve

The current account surplus passed half a billion euros last year for the first time ever. The large surplus was caused by large-scale exports of goods and services, which picked up particularly in the second half of the year. The surplus in the current account was around 100 million euros more than in 2015 mainly because the outflow of income was smaller. The increase in the current account surplus was clearly slower than in recent years, which is in line with Eesti Pank’s economic forecast.

Alongside the good results for exports there was continuing growth in the fourth quarter of 2016 in imports of goods and services.Imports of goods increased by 3% over the whole year, and imports of services by 8%. In the first half of the year the growth in goods imports was underpinned by capital goods brought in as investments, but the rate of growth could not be maintained in the second half of the year and less was imported as capital goods in the fourth quarter than a year earlier. This indicates companies are being careful in investing and overall investment activity is recovering more modestly than expected. This is confirmed by the financial account of the balance of payments, which indicates that the direct investment made in the equity capital of foreign-owned companies was less than the amount taken out from them, meaning no new money came into the country for investment in 2016.

Estonian assets abroad grew more in 2016 than external liabilities, so Estonia was a net lender for the whole year. The net international investment position, which is the difference between external assets and external liabilities, climbed in consequence to -37% of GDP for the whole year. The current account surplus gives hope that the net investment position may improve, and if the current trend were to continue, Estonia could reach the -35% recommended by the European Commission within a few years1.

1 The European Commission looks at the net international investment position as one of the indicators of possible imbalances in an economy, and it has set the threshold for where the danger appears at -35% of GDP.

Source: Bank of Estonia

Author: Kristo Aab, Economist at Eesti Pank

Estonian trade increased after three years of decline

According to Statistics Estonia, in 2016, the exports and imports of goods increased by 3% each compared to 2015. The last time trade grew in comparison of years was in 2012.

In 2016, exports of goods from Estonia amounted to 11.9 billion euros and imports to Estonia to 13.5 billion euros at current prices. The trade deficit in 2016 was 1.6 billion euros, the deficit increased by nearly 73 million euros compared to 2015. The largest surplus was in the trade in wood and articles of wood and miscellaneous manufactured articles (incl. furniture and prefabricated buildings of wood), the largest deficit was registered in the trade in transport equipment and in raw materials and products of chemical industry.

Similarly to previous years, electrical equipment was exported the most, accounting for 22% of Estonia’s total exports in 2016. This was followed by the exports of wood and articles of wood (10%), agricultural products and food preparations (9%) and miscellaneous manufactured articles (9%). The increase in exports was mostly impacted by a rise in the exports of mechanical machinery, electrical equipment and wood and articles of wood. The biggest decrease in exports in 2016 year was recorded in mineral products and agricultural products and food preparations.

The top destination country of Estonia’s exports in 2016 was Sweden (18% of Estonia’s total exports). Finland (16%) was second and Latvia (9%) third. The biggest increase occurred in exports to Mexico, Germany and Finland. Exports to Latvia, Sweden and the USA decreased the most in 2016.

The share of goods of Estonian origin in total exports was 72% in 2016. In the exports of goods of Estonian origin, the largest increase was in the exports of mineral products, wood and articles of wood and electrical equipment. The exports of agricultural products and food preparations dropped significantly.

The main destination countries of goods of Estonian origin are Sweden, Finland and Germany. The biggest increase in the exports of goods of Estonian origin was in the exports to Mexico and Germany and the biggest decrease in the exports to Sweden and Russia.

In 2016, the main commodity imported to Estonia was electrical equipment; its share amounted to 18% of Estonia’s total imports. The second and third places were held by transport equipment (11%) and agricultural products and food preparations (11%). In a year, the imports of transport equipment and base metals and articles of base metal increased the most. The imports of mineral products decreased.

The main countries of consignment in 2016 were Finland (13% of Estonia’s total imports), Germany (11%), and Lithuania (9%). The biggest increase occurred in imports from the Netherlands, Hungary and France. The largest decrease was registered in imports from Finland and Russia.

Estonia exported goods to 179 countries and imported goods from 144 countries. A positive foreign trade balance was recorded in the case of 97 countries. The biggest surplus (1 billion euros) was recorded in trade with Sweden, followed by Norway, Mexico and Finland. The biggest deficit was recorded in trade with Germany, Poland and Lithuania.

In 2016, the share of European Union countries in Estonia’s total exports was 74% and total imports 82%. The trade deficit with other European Union countries totalled 2.4 billion euros, which is 219 million euros more than in 2015. Exports to EU countries increased by 85 million euros and imports by 303 million euros. In trade with non-EU countries, exports increased by 232 million and imports by 86 million euros.

In 2016 compared to 2015, export prices decreased by 1% and import prices by 2%.

In December 2016, exports of goods from Estonia amounted to 1.0 billion euros and imports to Estonia to 1.2 billion euros. Compared to December 2015, exports increased 10% and imports 8%.

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Exports of both goods and services increased in December 2016

The flash estimate1 put the Estonian current account at 65 million euros in surplus in December 2016. The surplus on the goods and services account doubled over the year to 74 million euros. The growth of 6% in goods exports at the end of the year was faster than the 5% in imports, so the deficit on the goods account narrowed to 112 million euros. The surplus on the services account was 186 million euros, which was 32 million euros more than at the same time a year earlier. Services exports increased by 11% because of growth in travel services and other services, while imports of services increased by only 6%. The net outflow on the primary and secondary income accounts totalled 9 million euros.

The current and capital accounts were in surplus by a total of 58 million euros in December. This meant that the Estonian economy has been a net lender to the rest of the world in the past nine months.

1 The quarterly balance of payments is compiled from a combined system of representative primary data sources, including surveys of companies, while the monthly balance of payments draws from a considerably smaller database. Although the monthly report uses as much data available for the month reported as possible, including administrative data sources and reports on international payments, it is subjective to a certain degree, which is why it is called an estimate. Once the quarterly balance of payments is released, the monthly balances of payments are adjusted accordingly. For more on the principles used in compiling the flash estimate, see http://statistika.eestipank.ee/failid/mbo/kiir_mb_eng.html

Eesti Pank publishes the flash estimate of the balance of payments monthly for the last month but one. Eesti Pank will publish the balance of payments for the fourth quarter of 2016 on 9 March 2017.

Source: Bank of Estonia (see better graph here)

In October exports from Estonia amounted to 1 bEUR

According to Statistics Estonia, in October 2016, the exports of goods increased by 2% and imports by 3% compared to October of the previous year. Compared to October 2015, the exports of goods of Estonian origin increased by 3% and re-exports, i.e. the exportation of goods imported from a foreign country, stayed at the same level.

In October, exports from Estonia amounted to 1.0 billion euros and imports to Estonia to 1.2 billion euros at current prices. The trade deficit was 151 million euros (in October 2015, it was 129 million euros).

The top destination country of Estonia’s exports in October was Sweden (16% of Estonia’s total exports), followed by Finland (16%) and Latvia (9%). The biggest increase occurred in exports to Mexico and Germany (up by 15 million euros to both), mainly due to increased exports of electrical equipment. Exports to Sweden and Latvia decreased the most.

The biggest share in exports was held by electrical equipment, followed by wood and articles of wood, agricultural products and food preparations. The increase in exports was influenced by the exports of optical, measuring, checking and medical instruments (incl. medical apparatus, measuring instruments, thermostats), electrical equipment (incl. communication equipment) and mineral products (incl. motor spirit, shale oil). There was a decrease in the exports of agricultural products and food preparations and transport equipment.

The share of goods of Estonian origin in total exports was 72% in October. The exports of goods of Estonian origin were influenced the most by a rise in the exports of mineral products (incl. shale oil, electricity) and electrical equipment. Among goods of Estonian origin, the biggest decrease occurred in the exports of agricultural products and food preparations due to decreased exports of cereals and fish, whereas the export of dried peas increased. The biggest share of goods of Estonian origin are exported to Sweden, Finland and Germany. The biggest increase in the exports of goods of Estonian origin was in the exports to Mexico, Togo and Rumania.

The main countries of consignment in October were Finland (12% of Estonia’s total imports), Germany (11%), and the Netherlands (10%). The biggest increase was in imports from the Netherlands, which doubled. Compared to October 2015, more electrical equipment and transport equipment was imported from the Netherlands. The greatest decrease occurred in imports from Finland.

In October, the main commodities imported to Estonia were electrical equipment, transport equipment, agricultural products and food preparations. The growth in imports was influenced the most by the imports of transport equipment. The biggest fall occurred in the imports of mineral products.

In October 2016, export prices increased by 3% and import prices increased by 1%.

Compared to September 2016, exports in October decreased 7% and imports stayed at the same level.

Diagram: Estonia’s foreign trade by month, 2015–2016

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In September, exports grew faster than imports

According to Statistics Estonia, in September 2016, the exports of goods increased by 13% and imports by 2% compared to September of the previous year. In the third quarter as a whole exports grew 7%.

In September, exports from Estonia amounted to 1.1 billion euros and imports to Estonia to 1.2 billion euros at current prices. The trade deficit was 62 million euros (in September 2015, it was 161 million euros).

The top destination country of Estonia’s exports in September was Sweden (15% of Estonia’s total exports), followed by Finland (15%) and Latvia (10%). The biggest increase occurred in exports to the Netherlands, Mexico and Germany (up by 33 million, 26 million and 16 million euros, respectively). Compared to September 2015, more mineral products were exported to the Netherlands and more electrical equipment to Mexico and Germany. Exports to the main destination country Sweden decreased by 13 million euros.

The biggest share in Estonia’s exports in September was held by electrical equipment, followed by mineral products, agricultural products and food preparations and miscellaneous manufactured articles. The increase in exports was greatly influenced by the exports of mineral products (incl. motor spirits, shale oil), electrical equipment (incl. communication equipment) and mechanical appliances (incl. industrial equipment). There was a decrease in the exports of agricultural products and food preparations.

The share of goods of Estonian origin in total exports was 71% in September. Compared to September 2015, the exports of goods of Estonian origin increased by a tenth and re-exports, i.e. the exportation of goods imported from a foreign country, by a fifth. The exports of goods of Estonian origin were influenced the most by a rise in the exports of mineral products, electrical equipment and mechanical appliances. Among goods of Estonian origin, the biggest decrease occurred in the exports of agricultural products and food preparations.

The main countries of consignment in September were Finland (13% of Estonia’s total imports), Germany (12%), Lithuania (10%) and Latvia (10%). The biggest rise occurred in imports from the Netherlands, Russia and the Czech Republic. Compared to September 2015, there was a growth in the imports of electrical equipment from the Netherlands, of mineral products from Russia and of electrical equipment from the Czech Republic. The greatest decrease occurred in imports from Finland.

In September, the main commodities imported to Estonia were electrical equipment, agricultural products and food preparations, and transport equipment. The growth in imports was influenced the most by the imports of transport equipment and raw materials and products of the chemical industry. The biggest fall occurred in the imports of mechanical appliances.

In the 3rd quarter of 2016, exports increased 7% and imports 1%, the previous time that exports grew this much quarter-over-quarter was in the 3rd quarter of 2012. Export growth compared to the same period of 2015 was influenced the most by the increased exports of electrical equipment and mineral products. In the 3rd quarter, among destination countries, the biggest increase occurred in exports to Mexico, Romania and the Netherlands.

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