Foreign trade increased faster in Estonia than in the euro area

  • The surplus on the current account of the Estonian balance of payments in 2016 was the largest since independence was regained
  • Foreign trade picked up last year as both exports and imports increased
  • Estonia is one of the few EU member states to owe less to other countries than is owed to it

According to adjusted figures, the surplus on the current account of the Estonian balance of payments in 2016 was the largest since independence was regained, amounting to 0.4 billion euros or around 2% of GDP. Exports and imports of both goods and services grew notably faster than in the euro area as a whole, as the turnover of goods and services increased by less than 1% in the euro area, but by over 4% in Estonia. As exports of goods grew faster than the imports, the deficit on the goods account narrowed to 0.8 billion euros. The surplus on services decreased slightly over the year to 1.6 billion euros.

Estonia was a net lender to the rest of the world again in 2016 as the outflow of capital exceeded the inflow by 0.4 billion euros. Capital mainly moved through portfolio investment, with the largest part of investments going into foreign securities and fund shares.

Estonia is one of the few member states of the European Union to owe less to other countries than is owed to it, and at the end of 2016 the rest of the world owed Estonia 21.5 billion euros while Estonia’s debt was 19 billion euros. This means that Estonia’s external assets exceeded external liabilities by 2.5 billion euros. The same case applies only in Bulgaria, the Czech Republic, Denmark, Belgium and Germany while the other European Union members have larger debts to the rest of the world than they have invested there.

The current account balance and trade in goods and services

Net external debt (debt liabilities minus debt assets) as a ratio to GDP in 2016 %

Eesti Pank publishes the balance of payments yearbook each autumn for the previous year. The balance of payments yearbook contains a detailed analysis of the three main documents containing external sector statistical data – the balance of payments, the international investment position and the gross external debt – at national and sectoral levels illustrated with tables and figures. The time series are of up to ten years. This year’s yearbook will contain a comparison of the Estonian external sector with other European countries for the third time.

Source: Bank of Estonia

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Harvesting is halfway to completion

According to Statistics Estonia, by 15 September, 57% of the sown area of cereals, 47% of the sown area of rape and turnip rape, and 49% of the area under potatoes had been harvested in Estonia.

By the same time last year, 91% of the sown area of cereals, 49% of the sown area of rape and turnip rape and 50% of the area under potatoes had been harvested.

Due to unfavourable weather conditions, ripening and harvesting of crops were delayed by many weeks. As a consequence, 77% of winter crops and only 45% of summer crops have been harvested. Among winter crops, 78% of winter wheat and 76% of rye, and from spring crops, 63% of barley, 51% of oats and 19% of spring wheat have been harvested. 92% of winter rape and winter turnip rape and only 8% of spring rape and spring turnip rape have been harvested. Of legumes, only 24% has been harvested.

According to preliminary data, in 2017, cereals were grown on 330,700 hectares in Estonia, of which 57% has been harvested for grain. One hectare of the harvested area gave on average 4,537 kilograms of cereals, with the average yield per hectare being 4,389 kilograms for rye, 4,777 kilograms for wheat, 4,584 kilograms for barley and 3,196 kilograms for oats. A part of cereals sown for grain will be harvested for green fodder. Legumes were grown on 65,800 hectares and yield per harvested hectare was 2,670 kilograms.

Rape and turnip rape were grown on 73,700 hectares. Most of winter rape and winter turnip rape has been harvested, while most of spring rape and spring turnip rape has not been harvested yet. One hectare of the harvested area gave on average 2,953 kilograms of rape seeds and turnip rape seeds.

Potatoes were grown on 5,400 hectares, of which 49% has been harvested. One hectare of the harvested area gave on average 19,025 kilograms of potatoes.

The statistics are based on the Estonian Agricultural Registers and Information Board (ARIB) land use data and statistical questionnaire “Yields (as of 15 September)”, the deadline of which was 15 September 2017. Statistics Estonia published the summary of the preliminary data in seven 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

The Dwelling Price Index continued to increase in 2Q

According to Statistics Estonia, in the 2nd quarter of 2017, the Dwelling Price Index changed by 0.3% compared to the 1st quarter and by 4.8% compared to the 2nd quarter of 2016.

Compared to the previous quarter, the prices of apartments increased by 0.1% and the prices of houses by 0.8%.

Compared to the 2nd quarter of 2016, the prices of apartments have increased by 5.1% and the prices of houses by 4%. Compared to the 2nd quarter of the previous year, the prices of apartments increased by 5% in Tallinn, by 7.7% in areas bordering Tallinn with Tartu and Pärnu cities, and by 0.4% in the rest of Estonia.

The Dwelling Price Index expresses the changes in square metre prices of transactions made by households for the purchase of dwellings. The Dwelling Price Indices have been compiled for apartments and houses (detached, semi-detached and terraced houses).Dwelling price index, 1st quarter 2005 – 2nd quarter 2017

In the 2nd quarter of 2017, the Owner-Occupied Housing Price Index changed by -1.7% compared to the 1st quarter and by 3% compared to the 2nd quarter of 2016.

The Owner-Occupied Housing Price Index expresses the changes in the prices of the acquisition of dwellings new to the household sector and other goods and services that households purchase in their role as owner-occupiers. The index consists of four parts: the acquisition of dwellings, other services related to the acquisition of dwellings, major repairs and maintenance, and insurance connected with dwellings.

The Owner-Occupied Housing Price Index is published on the base 2010 = 100. The time series starts from the 1st quarter of 2005; major repairs and maintenance are included from the 1st quarter of 2007 and insurance connected with dwellings is included from the 1st quarter of 2012.

For the statistical activity “Dwelling price index and owner-occupied housing price index”, the main representative of public interest is the Ministry of Finance commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia

Inflation was at its fastest for four years in July

  • The rise in the excise on beer increased the price level by 0.4 percentage points in July
  • Inflation stood at 3.6% in July according to Statistics Estonia and half of it was due to a 6.4% rise in food prices.

Core inflation, which shows price changes for manufactured goods and services, accelerated in July to 1.8%, mainly because of higher services prices.

The rise of food commodities prices on global markets, which started in mid-2016, has been passed into Estonian consumer prices to a significant extent. Prices for dairy products have risen especially fast, as the producer prices of butter continue to set new records on the EU market. Other food prices, especially those for fruit and vegetables, have however stabilised over the past months, as commodities prices are growing somewhat more slowly. Higher excise taxes caused a 21% price increase for the beer sold in shops, which affected the consumer price index in July by 0.4 percentage points.

The inflation in most euro area countries remained low in July at 1.3%. Rapid economic growth has not started to impact prices yet, as some euro area countries are underutilising their production capacity and inflation is also being held back by the appreciation of the euro. Since April, the euro has risen 8.5% against the US dollar. The strengthening of the euro has not caused fuel prices at filling stations to change much, although the price of a barrel of crude oil on global markets has risen from 46 US dollars to 52 in two months. The rise in the exchange rate of the euro is encouraging the prices of imported manufactured goods to fall, but it also slows down the growth of euro area exports.

Eesti Pank forecasts that inflation will continue to move at a fast pace until the end of the year. Prices should increase more slowly in the first half of next year, but still faster than the euro area average.

Inflation in the euro area remains low and rapid economic growth has yet to affect prices

Inflation in Estonia and euro area
Author: Sulev Pert, Economist at Eesti Pank

Spending by inbound visitors up by 20 mEUR in Q2

There were close to 1.8 m visitors from abroad, an increase of 7% when compared with Q2 of 2016.  While the number of visitors from Finland remained stable, accounting for one-third of the total, the trips made by residents of other EU Member States increased by one-tenth.

Residents of Russia made 210 000 visits to Estonia, representing a 3% rise over the past year. The number of tourists from the US increased by a quarter and there were more visitors from Spain (a 40% rise), Latvia (15%) and the UK (27%). Trips from Poland and Belarus have, by contrast, fallen.

The number of visitors staying overnight was up 5%, compared with Q2 of 2016. The average length of stay was the same as a year earlier at 4 days. Same-day visitors accounted for around a half (49%) of the total inbound visitors and their number increased by 9% compared to a year ago.

Visitors from abroad spent an estimated total of 415,000,000 euros, which was 20,000,000 euros more than a year ago.

In the second quarter of 2017, residents of Estonia made around 1,000,000 visits to foreign countries, which was 13% more than a year earlier1.80% of the visits were made to other EU Member States. There was a notable increase in the number of visits to Belgium and Greece. The number of trips to CIS countries increased by one-fifth: there were 75% more visits to Ukraine compared to a year ago. As usual, Finland was the top destination, with 170,000 visits, which, however, represented a 8% decline from a year ago. Trips to Norway also fell by 11%.

Outbound overnight visits increased by 13%, while their average length remained at 3.5 days. Same-day visits accounted for 14% of the total, showing a 9% increase.

Visitors from Estonia spent an estimated total of 300,000,000 euros, which was 20,000,000 euros more than in Q2 of 2016.


The number of trips abroad and the number of visits abroad are not the same, as one trip abroad may include visits to several countries.

The movement of travellers has a noticeable effect on the exports and imports of travel services in the Estonian balance of payments. The balance of payments statistics for the second quarter of 2017 will be published on September 7.

Source: Bank of Estonia

Estonian current account at 67 mEUR in surplus in June 2017

The flash estimate1 put the Estonian current account at 67 million euros in surplus in June 2017. The surplus on the goods and services account was 104 million euros, which was 11 million euros more than a year earlier. Volumes of both goods and services increased. Goods exports were up by 8% over the year and imports by 6%, and so the deficit on the goods account narrowed by 8 million euros over the year to 81 million euros. Services exports were up by 5% and imports by 6%, and the surplus on the goods account widened by 4 million euros to 185 million euros. The net outflow of investment income and current transfers, or the primary and secondary income accounts, increased by 16 million euros to 37 million euros.

The current and capital accounts were in surplus by a total of 85 million euros, meaning that the Estonian economy was a net lender to the rest of the world, so the country as a whole invested more financial assets abroad than it received from there.

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 of the 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 here.

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 second quarter of 2017 on 7 September 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.

Source: Bank of Estonia

Demand for labour remained strong in 2Q

  • The labour market indicators remained good in the second quarter
  • The employment expectations of companies improved and they felt labour shortages more sharply
  • The unemployment rate rose to 7%,
  • Growth in productivity accelerated

The Labour Force Survey shows a fall of 0.5% in the number of people employed in Estonia in the second quarter of 2017 and a rise of 0.5 percentage point in the unemployment rate to 7%. The change is not large compared to typical statistical variation, suggesting that conditions remained good in the labour market in the second quarter.

The share of people of working age who were in employment was 66.9%, and most data sources show strong demand for labour. Registry data from the Tax and Customs Board show an increase of 0.9% in the number of people declared as receiving a wage in the second quarter, driven by the private sector. The confidence survey of the Estonian Institute of Economic Research shows that companies have improved their employment expectations, and the share of the companies questioned considering labour shortages to be a factor limiting production increased. Employment expectations have particularly increased in the construction sector, where the restriction of labour shortages is also particularly felt. Households also became more optimistic and fears of increased unemployment have declined sharply during 2017.

Statistics Estonia puts the unemployment rate at 7%, which is 0.5 percentage point higher than in the second quarter of last year. Although health is keeping about the same number of people out of the labour market as a year ago, the rise in the unemployment rate probably reflects the effect of the work ability reform. Data from Eesti Töötukassa, the Estonian unemployment insurance fund, show that the number of registered unemployed with reduced ability to work approached 10,000 and a further rise in this number is expected. The data indicate that some 7% of people with reduced ability to work found work each month in 2017. The rate of finding jobs was, as expected, somewhat lower than the rate of 12% for those with full ability to work. Unfortunately around 7% of those registered with Töötukassa leave the register of their own volition or because they cannot meet its conditions. As this also means losing work ability benefit, the reasons behind this and how people are subsequently able to cope need to be analysed.

Labour productivity has now been growing for a year and the increase picked up even further in the second quarter according to data on industrial output and exports. More efficient organisation of work allows companies to improve their profitability even if wages continue to rise as quickly as they have been doing.

Source: Bank of Estonia

Author: Orsolya Soosaar, Economist at Eesti Pank