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Sunday 23.07.2017 | Name days: Magda, Magone, Mērija
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SEB: to reach new export peaks, state support has to be increased

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIn August, Latvia exported goods worth a total of EUR 868.6 million. External trade deficit was EUR 177 million. Import volumes have declined 0.7%, whereas exports have jumped 9.9% over the course of the year. This may mean a recovery for exports.

But there is currently no reason for such conclusions, because rapid changes over the course of the year was only possible because of the weak growth in 2015, SEB Bank economist Dainis Gaspuitis comments data released by the Central Statistical Bureau of Latvia.

«Of course, exports of grains, iron, steel and transports have grown over the course of the year. Exports of wood materials continued growing as well, but much more slowly. Exports of oil products, mechanisms and machineries have decreased. Exports of electrical appliances and electrical devices had contributed to last year’s export growth. Exports of those products have declined this year, however. This could be because of changes to re-export regulations and changes to tax legislation (reverse VAT). If it is so, this negative influence should be taken into account. Exports of alcoholic beverages have declined also. In previous years, those products were the main engine for export growth. Changes in Russia’s market will continue weakening this sector. Its recovery may turn out very complicated for exporters who focus on Russia,» – explains the bank’s expert.

According to him, «export volume decline is largely influenced by the negative impact from re-exports, which is only increased by the decline in purchasing power on the Russian market, sanctions and their influence on satellite markets. This only serves to complicate the already unfortunate external trade environment even more. With that, this year’s export volumes will be lower than expected. Conjuncture will improve slightly next year, but it will not provide the desired breakthrough because of lasting low investment activity in export sector. Negative influence on total volumes will form in the next several months, resulting in lower production output.»

«Negative influence will continue in the next several years because of reduced re-export volumes. The decline will increase because of Russia’s transit policy. This is why even though tools to assist export growth are available, it is necessary to increase state support to reach new export peaks,» – Gaspuitis concluded.

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