Better times are coming for the food industry says Madis Müller

Madis Müller, Governor of Eesti Pank, told the annual conference of the food industry on Wednesday that Estonia's goods exports have withstood the pandemic crisis well and that domestic retail trade benefited last year from facing relatively few restrictions. He said that food production has fared better than many other sectors, both in the domestic market and in exports.

He highlighted that Estonia managed to increase its market share of goods exports during the year of crisis and was one of the most successful countries in Europe in that. Exports of services suffered seriously at the same time though. This can be seen in the nature of the current crisis, as the pandemic has affected different sectors very differently. Some sectors, including food production, had sales turnover at the end of last year that was already above its pre-crisis level or close to it. Sales revenues for drink production were lower than a year earlier though.

The central bank governor said that the performance of the economy will depend in the near future above all on the degree and the duration of the restrictions imposed to stop the spread of the virus. State subsidies and the efforts of the euro area central banks to keep the cost of borrowing down have helped to ease the impact of the pandemic on the economy.

It is forecast that the external environment will improve for Estonian businesses. The global economy is expected to start growing again after its recession last year and corporate confidence has already improved. International trade around the world has returned to its level of before the crisis. Eesti Pank forecasts that growth in the Estonian economy will accelerate in the second half of this year.

The Estonian labour market adjusted rapidly to the crisis and the tighter restrictions on the new wave of the pandemic will not significantly reduce employment any further. The state subsidies played an important role in this. Companies were already showing increasing interest in hiring additional employees at the start of this year. Wages have continued to rise in most sectors in Estonia, including those where employees were made redundant.

Mr Müller said that the growth in both corporate and household deposits is particularly notable during the crisis. As the restrictions are eased, a significant part of the forced saving that has built up in deposits will go to consumption and will help revive the economy. Domestic retail trade will also get an additional stimulus in the autumn from the money that will be withdrawn from the second pension pillar. Eesti Pank forecasts that consumption will increase by a little more than 10% next year.

Eesti Pank Governor Madis Müller was speaking at a conference of the food industry on Wednesday on the return to normality.

Additional information:

Viljar Rääsk
Head of Communications
Eesti Pank
6680 745, 5275 055
Email: viljar.raask [at] eestipank.ee

Press enquiries: press [at] eestipank.ee