Foreign demand started to revive a little at the end of last year, and it continued to do so in the first quarter of this year. This was accompanied by a slight turn for the better in exports, as turnover increased for some sectors. The total turnover of exports in the first quarter was still less than it was a year earlier though.

The turnover of Estonia's foreign trade was down in the first quarter by a little over 7%, which means that exports and imports of goods and services were smaller than a year earlier. Data from the balance of payments show that the turnover of exports of goods was down 7.4% in the first quarter, while the turnover of imports was down 6.5%. The turnover of exports of services was up by 2% on a year previously though, while the turnover of imports of services was about the same as a year earlier, having increased by only 0.3%.

Goods exports were mostly down because of the continuing downturn in manufacturing. It may be hoped that manufacturing has come through the worst of its serious difficulties in the first half of the year and adapted to the changes in supply channels and higher costs of inputs. That exports are performing better is indicated by the turnover of exports starting to increase in some of the most important sectors. Exports of wood and wood products have grown since the start of the year for example, as have exports of food products. Exports of machinery and equipment and other manufactured products have been volatile in the early part of the year, but this sector is affected most by demand from trading partners and the situation in Scandinavia remains uncertain, while growth is returning in Germany.

Since the economy has turned down, companies need fewer inputs for their production, and consumption is also smaller. The volume of goods and services imported consequently continued to decline in the first quarter. The level of turnover of imports of services is the same as it was a year earlier and growth is close to zero. Transport services were down, and so were imports of business services, while imports of travel services and telecommunication services increased.

Exports of services grew in the first quarter of the year, though the growth was still much slower than earlier. It continued to be led by exports of telecommunications services, as the turnover of exports of them increased by 14%. Exports of travel services among the larger groups of services increased by 4%, but exports of other business services, which had previously grown strongly, were only 0.1% larger in the first quarter than a year earlier. Exports of transport services were down because of the decline in trade in goods.

The current account deficit was 124.7 million euros in the first quarter, or 1.4% of GDP. The current account continues to be backed by the surplus in services, and the deficit in goods in the first quarter was smaller than it had been at the end of last year.

Exporting companies, which were under heavy competition pressure throughout last year, report to surveys that the situation has improved. Export orders were in a better place in the first quarter than in the final quarter of last year. Companies that believe things will not deteriorate any further and that have already noticed their competitiveness improve are also in the majority.

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

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