Estonia has been waiting a long time for growth in foreign demand to pick up. Foreign demand is now growing but the picture varies widely from country to country, as things are improving in the Nordic countries but less so in Germany, while growth in Lithuania and Poland is stronger. Demand had recovered sufficiently in the third quarter to bring exports of goods out of their slump, as the total turnover of them was 2.8% larger than a year earlier. Exports of services continued to grow in the third quarter and were up 7.6% on the year.

Another indication that the economy is reviving is given by the turnover in Estonia’s foreign trade, which was 3% more in the third quarter than a year earlier. Data from the balance of payments show the turnover of exports of goods increased by 2.8% in the third quarter, while imports increased by 1.4%. The turnover of exports of services was 7.6% up on a year earlier meanwhile, and the turnover of imports was up 1.9%.

Most of the main groups of goods exported have started to grow. The turnover of exports of wood and wood products grew in all three months of the third quarter. The turnover of exports of machinery and equipment and from food processing also increased. More than half of Estonia’s exports of goods are intermediate goods as they are mainly inputs used in manufacturing that move between production facilities in different countries. There is consequently particular interest in the Nordic markets recovering, as Estonia is linked through those to the USA, Asia and Germany. Exporters have started to enter the German market independently over the past year, as exports to Germany increased by 9% over the year. It was expected in the first half of the year that the German economy would start growing again, but now there is more pessimism about it, and this could hamper the growth in exports.

Exports of services also continued to grow and were up 7.6% on the year in the third quarter. Demand was particularly good for information and communications technology, where the turnover of exports increased by 8.7%. Inflation falling supported the growth in travel services, as exports of them were up 15%, while the revival in foreign trade has brought growth back to exports of transport services after a long time, as they increased by 5.5%. Exports of other business services have returned to growth, gaining 7.4%.

Imports of goods and services continue to reflect the generally sluggish performance of the economy. The turnover of goods imports increased by only 1.4% in the third quarter, while imports of services were 1.9% more than a year previously. Weak domestic demand has been the main factor affecting imports of goods, alongside the reduced need for commodities and inputs in manufacturing.

The current account deficit was 306 million euros in the third quarter, or 3% of GDP. The surplus in services continued to bolster the current account.

Assessment by companies of the state of the economy improved a little in the first half of the year for both export orders and competitiveness. A degree of pessimism returned in the second half of the year though, as businesses felt some uncertainty about competitiveness in foreign markets.

See also the statistical release on the balance of payments and the international investment position for the third quarter of 2024.

_{Additional information:
Hanna Jürgenson
Communications Specialist
Eesti Pank
Tel: 5692 0930
Press enquiries: [email protected]}