The merchandise trade deficit narrowed by 38.8% y/y to EUR98.6m in August, according to figures of the statistical office. The decline of exports deepened further to 2.7% y/y, marking the third consecutive month of decline. Meanwhile, import dropped tangibly by 7.1% y/y, after a 4.5% y/y increase in July.
The most significant impact on the decline in exports came from mineral products, while exports increased the most for agricultural products and food preparations and base metals and articles of base metal. The top destination countries of Estonia’s exports were Finland (17% of total), Sweden (11%) and Latvia (9%) with the biggest decline occurring in exports to Latvia and the Netherlands, while exports to Canada increased the most, all affected by mineral products.
On the import side, Estonia’s key trading partners were Finland (14% of total), Lithuania and Germany. Imports decreased the most from Russia and Belarus, due to a decline in the imports of mineral products. Imports increased the most from Finland (up by 9 million euros) mainly on account of electricity.
All in all, we expect that exports will continue to be negatively affected by moderating demand among trading partners, while lower investment demand given uncertainties of the external environment will likely put downward pressure on imports. On the other hand, we expect that household consumption should continue to support import growth, driven by still solid demand, partially supported by the labor market.