African swine fever found in Estonia

African swine fever (ASF) has spread to a third agricultural holding in Estonia’s southern Viljandi County which is only a few kilometres away from the Baltic states’ largest industrial pig farm Ekseko, the regional newspaper Sakala reports.

The Veterinary and Food Board received Monday afternoon blood test results which confirmed the presence of the disease on a small holding just a few kilometres from the Ekseko farm of the meatpacker Rakvere Lihakombinaat. Results of tests on additional samples taken from the carcass are expected on Tuesday, head of the Viljandi veterinary centre Terje Oper said.

Kerstin Aps, communications chief at Rakvere Farmid that owns Ekseko, said the company is not affected by the discovery as they have already introduced all possible precautionary measures. Asked what being included in a quarantine zone would mean for the company, Aps said she can offer no comment for the time being.

Last week ASF was found on two pig farms in Viljandi County. More than 500 pigs were destroyed. The disease has also been diagnosed on a family farm in Valga County.

ASF does not pose a threat to other animal species or humans but can be deadly for domestic and wild swine and cause massive losses to the pig farming sector.

Source: Baltic News Service via Estonian Review

Estonia’s exporters still struggling

• Sluggish export volumes to be expected in 2015
• Situation across sectors differs
• Growth of exports expected to strengthen in 2016

Sluggish export volumes to be expected in 2015
The growth of exports has been rather modest in recent years. One of the reasons has been weak demand in Estonia’s export markets. Import demand in Latvia and Finland has been stagnant for the past two-three years, and demand in Russia has deteriorated remarkably in 2014-2015.

Situation across sectors differs
The producers of electronics, wood/furniture, and metal products are doing relatively well, while exporters related to the Russian market (dairy, vodka, the oil industry, logistics and tourism) feel the impact of smaller orders from the east. Also, in terms of output prices, some enterprises have been able to ask higher prices for their products (pharmaceuticals, metals, and furniture), while others have had to accommodate not only weak demand but also lower prices (most notably, petroleum products, but also electronics, food, and chemicals).

Growth of exports expected to strengthen in 2016
Sentiment among Estonian manufacturers has deteriorated somewhat this year as export order books are thinner. We expect export demand, as well as export prices, to remain tepid throughout 2015. Demand will weaken in Russia, Latvia, and Lithuania and remain stagnant in Finland this year. Export volumes should pick up in 2016, supported by more robust economic growth among Estonia’s trade partners. This should widen export opportunities for Estonian companies and boost export volumes.

Source: Swedbank

Bill created to tighten smoking laws

The government has drawn up a bill which will further limit where smoking is allowed.

In 2007, smoking was banned indoors in bars and cafes, with the new bill taking aim at designated smoking areas in buildings. Lawmakers are aiming for the ban to come into effect in 2017, Eesti Päevaleht reported. Prisons will also become smoke free that year.

Special rooms for smoking may still be set up in buildings, but according to the daily, these rooms will be the next to go.

“Ventilation systems, designated smoking rooms and partial limits do not offer people enough protection from second hand smoke in the environment,” the bill said.

The Health Board has so far identified 40 such areas, including in care homes and casinos.

Diana Ingerainen, head of a union of GPs, said limiting places where people can smoke has shown to be effective in cutting smoker numbers.

The number of people, between the age of 16-64, who smoke at least one cigarette every day has plummeted from slightly over 50 percent to 19.5 percent in 2014.

Source: ERR via Estonian Review

Minister promises to regulate foreign doctors

Health and Labour Minister Rannar Vassiljev said he will come out with proposals on how to regulate the growing number of medical doctors from outside the EU, who are working in Estonia.

The Ida-Viru central hospital employs 160 doctors, of whom a fifth are from other former Soviet Union states, and most have arrived in recent years, Postimees reported.

Tarmo Bakler, the CEO of the hospital, said they have received more doctors from outside the EU than from the University of Tartu, which has Estonia’s biggest medical school.

Bakler said foreign doctors in Estonia are partially unregulated, which gives way to different interpretations of existent laws.

Currently, foreign doctors have to have completed a three-year residency period. Doctors in Russia must only complete a one year program in Russia, before receiving their medical licenses. That has hindered some from coming to work in Estonia, but the requirement can be substituted for an exam at the University of Tartu, or for work experience.

Source: ERR via Estonian Review

EU needs common travel warning system

The European Union needs a unified travel warning system as the warnings issued by individual member states are uneven and leave to be desired, member of the European Parliament for Estonia Urmas Paet says.

Paet turned to the European Commission drawing attention to the uneven character of travel warnings and risk assessments of EU countries and proposing a single EU-wide system.

Recent attacks against European tourists in Tunisia revealed the uneven character and shortcomings of the current travel warning systems, the Estonian MEP said. “All EU member states issue public travel warnings and risk assessments for travellers, but different countries have different systems and the overall picture is uneven,” he said.

Paet also said some tour operators do not take warnings seriously and continue to arrange package tours to countries and areas deemed unsafe. He therefore asked the Commission about the possibility of introducing a common travel warning system and whether observing travel warnings could be made mandatory for operators of package tours.

Source: Baltic News Service via Estonian Review

The volume of deposits has increased by 11 pct over the year

The volume of loans and leases issued to companies and households was 15.5 billion euros at the end of June. Year-on-year, the loan and lease portfolio has grown by 2.9%. Annual growth in the volume of loans and leases to companies decelerated to 2% in June. The areas that saw the fastest growth in corporate borrowing over the past year were trade and real estate development.

The growth of the household loan and lease portfolio accelerated somewhat. Over the year, the volume of housing loans has increased by 3.8% and the volume of other loans by 4.3%. Housing loans worth 81 million euros were issued in June, i.e. about the same amount as in the previous months. Car leases issued to individuals have increased quickly, while car leases to companies have decreased by the same amount. In June, 3% more car leases in total were issued than the same time a year before.

The interest level of loans and leases continues to be low thanks to low base interest rates. The interest rate on both housing loans issued to households and long-term loans issued to companies was 2.2% in June.

The quality of loans issued by banks declined a little, similarly to the previous months. The share of loans overdue for more than 60 days grew to 1.7% of the loan portfolio. The share of loans overdue has increased the most among companies related to agriculture and real estate development.

Companies and households are still actively depositing their funds. Over the past year, the amount of corporate and household deposits in banks’ balance sheets has increased by 10.7%. Corporate deposits have seen a particularly fast rise, as their annual growth increased by 14.2%. Like in the previous months, household deposits have gone up by almost 8% per year.

Banks earned 261 million euros in profit in the second quarter. The greatest factors impacting the change in profits were the dividend income from subsidiaries (229 million euros) and the income tax withheld from the large dividend payment made from the profit of the previous years (45 million euros). Without one-off transactions, the banks earned 77 million euros in profit in the second quarter, which is 6% less than in the second quarter of last year. Profits were supported by an increase in commission income, but decreased because of smaller net interest income and larger administrative expenses.

Source: Bank of Estonia

Author: Jaak Tõrs, Head of the Financial Stability Department

The low investment activity is reflected in the slower growth of corporate debt

The growth of corporate debt decreased at the start of the year. In quarterly terms, the volume of loans taken and bonds issued stopped increasing by the end of the first quarter of 2015, but year-on-year, the growth reached nearly 4%. The volume of long-term loans has decreased because of moderate investment activity, both in case of loans taken from the Estonian financial sector and loans taken from abroad.

Corporate equity decreased somewhat in the first quarter. Reduced profits and relatively substantial dividend payouts meant that reinvested profits also decreased, and the growth of equity, which was fast-paced after the economic crisis, stopped. In international comparison, however, the level of equity in the Estonian corporate sector is quite high.

The incomes and savings of households are still growing faster than their loan liabilities. Higher incomes helped the cash and deposits of households to increase by 9% over the year, to 6.3 billion euros. At the same time, loan liabilities grew by 3.5% and reached 7.8 billion euros. The growth rate of both long-term housing loans and short-term loan liabilities has accelerated somewhat. The indebtedness of households as a ratio of disposable income decreased and as a ratio to GDP remained at 40%.

Like in the past five years, Estonian residents still invested or returned more funds abroad than they took in from there. This was because Estonian residents still saved more in the first quarter than they invested.

Source: Bank of Estonia

Author: Taavi Raudsaar, Economist at Eesti Pank

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