Foreign markets remained pessimistic in the second quarter and the slump in demand caused foreign trade volumes to shrink. Estimates by businesses of the sufficiency of export orders are notably poorer in the third quarter than they were in the second, indicating that the difficulties have still not eased. The mood among businesses is also pessimistic in several of Estonia’s main trading partners.

The economies of Estonia’s trading partners have been weak this year and this has reduced demand for goods and services from Estonia. The turnover of Estonia’s foreign trade is lower than it was a year ago because of the decline in trade in goods. Exports of goods fell by 9.6% over the year and imports by 11.4%, but the turnover of exports of services was 7.9% larger in the second quarter than it was a year earlier, while the turnover of imports of services was up 2.2%.

The difficulties faced by exports of goods come mainly from the downturn in manufacturing, where sales volumes of exports were down in almost all areas in the second quarter. Exports by companies in the wood sector continue to struggle, as demand is weak in the Scandinavian markets that are important for them. Exports only grew in the second quarter in agriculture and food products, and they stabilised to some extent in metal products and machinery and equipment.

Imports of goods fell for the second consecutive quarter. Various factors caused this, such as the earlier stocking of inventories of goods, the reduced need for inputs in manufacturing, and a fall in imports of mineral fuels. The turnover of imports of unprocessed wood, metals and manufactured goods were all down in the second quarter. Imports of goods largely declined in the first half of 2023 because prices of fuels fell, while sanctions reduced imports of mineral fuels.

Services exports as a whole were up in the second quarter. The turnover of exports of services was 7.9% more than it was a year earlier and exports grew for ICT services, other business services and travel services, while exports of transport services were down as trade in goods declined. Problems in construction and the real estate market in Scandinavia led to a downturn in exports of construction services, though some small recovery was apparent there in the second quarter.

The surplus on the current account was 3% of GDP in the second quarter, primarily because of the surplus on the services account and because the deficit on the goods account narrowed.

Businesses in Estonia and Europe remain pessimistic in their expectations because of the deepening general economic uncertainty. Estimates by Estonian companies of their competitiveness were even poorer in the third quarter than they were in the second. Several important export markets for Estonia are also in a pessimistic mood, as estimates by companies of their competitiveness are at low levels in Germany and in Finland.

See also the statistical release on the balance of payments and international investment position for the second quarter.

Additional information:
Hanna Jürgenson
Communications Specialist
Eesti Pank
Tel: 56920 930
Press enquiries: [email protected]