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Ceturtdiena 27.07.2017 | Name days: Marta, Dita
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Expert: can Latvia’s economy eat what it bit off this year?

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUExport markets’ growth is sustainable and its growth will continue this year. However, the upcoming elections in Europe could potentially ruin consumers’ mood in Latvia’s largest export destinations. In general, the country’s economy continues to grow, economic experts say.

BNN had previously reported that the value of export goods has grown 13.3% and the value of import goods has grown 18.5%.

DNB Bank’s economist Peteris Strautins says about January’s export: «This is the most rapid annual increase since April 2013. For the first time in the past four years conditions for exports of goods are actually positive.»

Swedbank economist Agnese Buceniece explains: «Processing industry’s breakthrough we’d noticed in Q4 and which is expected to continue this year is clearly reflected in export yield».

SEB Bank’s macroeconomics expert Dainis Gaspuitis notes that foreign trade had begun improving at the end of last year. In addition, news about Estonia’s export and import growth (14% and 40% respectively) was published a little earlier than usual. This information suggested that Latvia’s success may turn out very good as well.

Strautins explains the main changes: «Positive mood also wars the logging industry, which was the only one in January to have had contributed to total export growth – more than a quarter, if we include furniture. Concerns about side-product and energy product sales crisis have not come true: pellet warehouses have been emptied considerably, saw mills and factories work at great speeds. Another one-eighth of exports consists of alcoholic beverages – the only in the re-export category with such a large influence. Exports of machineries and equipment declined 9.9% and exports of electrical appliances and equipment declined 2.1%. Provisionally speaking, local export has grown by 16% and re-export – by 10%».

«The largest contribution to growth was provided by exports of wood, metal and metallic products, food and vehicle exports. These industries are also noteworthy for the increase of industrial output. In January, after almost a two-year draught, producer prices for export goods finally began growing again,» Bauceniece explains.

Swedbank economist explains CSB’s data on imports: «Imports of mineral products continue decreasing. Rapid increase of import value is secured by chemical production, food, vehicles, metals and metallic products. Over the course of the past couple of months, we have noticed a trend that after one year gap, imports of mechanisms and mechanical devices and electronic devices have finally started growing again (+13% and +7% respectively). This could mean that investment activity is beginning to recover in Latvia.»

Gaspuitis explains predictions for the future: «Exports of woodworking, food products, metal and metallic products demonstrated stable growth in January. Growth in exports will continue this year. It is likely there may be major fluctuations in exports. Nevertheless, we expect a 6% increase. It will create a good impulse for potential growth in other exports. Contribution to growth and more active investments and consumption will pull along imports, which will pull trade balance into the negative again. This decline will be covered with surplus of service export balance.»

Swedbank economist Bauceniece is of a similar opinion: «Growth in Latvia’s largest export markets is sustainable, demand continues to increase and consumers’ mood is positive. This can help cultivate export volumes. Export prices have begun growing and it seems export price deflation is behind us. Higher prices for out exporters promise higher income.»

Strautins also shares his opinion: «The economy would also grow this year even if stagnation was present in exports. This year’s main challenge will be finding people that will build homes, produce goods, provide programming services, work at restaurants and sell clothes. Some of them currently complain about the poor state of gravel roads and others work abroad.»

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