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Expert: Latvia’s export contribution is closely tied to the situation in the EU

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIt is important to note that a major export value increase was noted in February – by 10.1%. This was largely thanks to growth in exports of transport and other services. With that, service export surplus grew to EUR 175.7 million, fully compensating foreign trade deficit, Finance Ministry comments on data from the Central Statistical Bureau of Latvia.

The biggest contribution to export growth in February was secured by food and agricultural product exports, mainly drinks, chemical products and mineral products, says Swedbank economist Agnese Buceniece.

Since December 2016, exports of beverages to Russia have been growing rapidly, which is positively affected by Russian rouble’s value growth in relation to euro. Statistical data shows that product value growth to Russia recovered last year. Export to Russia has grown by an average of nearly 50% in the first two months of 2017. The largest contribution was provided by exports of beverages and mechanical devices, Buceniece concluded.

Finance Ministry states that exports grew thanks to the rise of raw material prices around the world, stable situation in Latvia’s export markets and growing processing industry volumes in Latvia, with export value of goods growing by 5.7% in comparison with February 2016.

This makes February the fourth consecutive months with positive export growth, Finance Ministry notes. At the same time, the value of imported goods grew more rapidly, by 6.5% on average.

Buceniece notes that total value of goods was negatively impacted by a decline in exports of wood and its products (-6.1%) to UK (-20%) and Estonia (-25%). February’s statistical data showed a slight decline in the industry’s produced volume. This decline is the reason for transitional monthly fluctuations, but is not a tendency. It should be added that approximately one fifth of exports are sent to the UK, which has commenced the exit procedure from the European Union.

Finance Ministry emphasizes a decline in exports of wood. Nevertheless, the ministry notes that although the value of wood and wooden products declined 6.1%, which was mainly influenced by the decline of lumber exports to the UK, general export value in February was close to last year’s average level (EUR 144.6 million). It is most likely that this is a short-term decline and does not mean any significant trend changes, as mentioned in Finance Ministry’s report.

Buceniece comments on the situation: «Latvia’s export contribution is tied closely to the situation in the European Union. In the first two months of 2017, we exported 10% more goods than last year. Survey results show that consumers’ mood and manufacturers’ production outputs in Europe continues to improve, which is sure to improve external demand,» she says.

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