Overall economic activity in international markets increased at the end of last year, but foreign demand remains weak. Estonian companies managed to remain relatively competitive in the fourth quarter despite this, and Estonia’s foreign trade turnover increased by 11%. As international markets remain very volatile, the risk increases as the crisis drags on that the exporters that have supported the economy will become weaker.

The recovery of exports in the fourth quarter was not broadly based, but it was achieved in sectors that are important for value added. Exports of goods increased by 13% from the same period a year earlier. The biggest contribution to the growth in exports came from electronic equipment and mineral oils and fuels, with wood and wood products and metal products also contributing.

The services market has not improved since the crisis started, and travel and transport services continued to fare badly. Services exports were in total 21% less in the fourth quarter than a year earlier. The stable growth seen last year in exports of telecommunications and computer services continued in the fourth quarter at 3.6%, and growth in exports of other business services increased to 10%. Growth in imports of services contributed most to the growth in the total turnover of trade in services because of an extraordinary large purchase of computer software.

Having been in surplus for a long time, the current account moved into deficit at the end of 2020 and stood at -11.3% of GDP. This was because of the extraordinary growth in imports of computer services. The sectors of the Estonian economy together had in previous years put more financial assets abroad than they had taken in from there, but this changed in the fourth quarter of last year as the Estonian economy took in more in financial assets from abroad and became a net borrower.

Confidence in manufacturing about orders improved at the start of this year as trade overall in international markets revived, supporting the outlook for exports. It should be noted though that the Covid-19 virus has affected countries differently and the stricter restrictions have hindered the movement of goods and caused uncertainty to increase among businesses and consumers.

Eesti Pank publishes an economic policy comment on external sector statistics, together with a statistical infographic on the balance of payments that covers changes in the current and capital accounts, the financial account, the international investment position, and the external debt.

Additional information:

Ingrid Schmuul
Communications officer
Eesti Pank
Tel: 668 0965, 5697 9146
Press enquiries: [email protected]