The merchandise trade deficit widened by 1.1% y/y to EUR 170.3mn in December, data of the stat office showed on Thursday. Imports increased by 8.2% y/y, underpinned by the solid household consumption. Imports of foodstuff went up by 9.4% y/y, influenced by the weak crop yield. Imports of base metals and chemical products increased by 30.5% y/y and 13.7%, respectively, supported by the acceleration of industrial output growth, which reached its highest level in the past two years. On the other hand, machinery imports fell by 4.7% y/y, suggesting that there was not significant revival of investment activity. The main import partners were Finland (13% of total imports), followed by Germany (11%) and Lithuania (9%).
On the export side, total exports rose by 9.5% y/y with exports of mineral and chemical products registering the biggest growth – 27.9% y/y and 38.6% y/y, respectively. Moreover, machinery exports rose by 25.4% y/y. The overall growth was supported by increasing demand from Finland, as a result of which exports to the Nordic country went up by 4% y/y. Thus, the share of exports to Finland from total exports amounted to 16% and the country ranked second among the main Estonian export destinations, following Sweden, whose export share stood at 18%. Exports to Russia remained unchanged, likely aided by strengthening economic activity in the country in Q4.
The merchandise deficit came in at EUR407.7m in Q4, compared to EUR299.1m in Q3. This suggests that net export’s negative contribution to GDP growth increased in Q4. Looking at the 2016 figures, the merchandise deficit widened by 4.7% to EUR1.6bn due to the 3.1% growth of imports. The strongest contribution to the increase came from vehicles imports, which rose by 18.1%. This was more than enough to compensate for the 4.7% fall of mineral products imports, which were influenced by the contraction of industrial output in H1. In the meantime, exports rose by 2.7% with the biggest contribution coming from the 5.6% growth of machinery exports.