Merchandise trade deficit narrows to EUR122.8m in Estonia

The merchandise trade deficit narrowed by 21.3% y/y to EUR122.8m in June, according to data published by the stat office on Wednesday. This reflected 10.2% y/y increase of exports, which was underpinned by strengthening external demand. Exports of mineral products surged by 72.9% y/y due to low base from Jun 2016 when they declined by 40.2% y/y. Moreover, food exports rose by 15.5% y/y, boosted by the tangible increase of international food prices. Other significant growth rates were reported by exports of wood (23.5% y/y), vehicles (16.8% y/y) and base metals (11.4% y/y). In regards to the export destinations, the main export partner remained Finland as exports to the country rose by 7% y/y and accounted for 16% of total exports. Sweden ranked second although exports to the country declined by 17% y/y. In the meantime, exports to Russia and Germany increased by 47% y/y and 41% y/y, respectively, and accounted for 8% and 7% of total exports.

On the import side, total imports rose by 6.2% y/y. The highest growth was recorded by vehicle imports, which rose by 18.5% y/y. Imports of base metals and chemical products rose by 16.8% y/y and 11.6% y/y, likely underpinned by rising industrial production. On the other hand, machinery imports fell by 7.8% y/y, affirming our view that investment growth slowed down in Q2. The main import partners were Finland (13% of total imports), Germany (11%), Lithuania (9%) and Sweden (9%).

The merchandise deficit amounted to EUR1.1bn (5.0% of GDP) in H1, compared to EUR920m (4.5% of GDP) in the corresponding period last year. The widening reflected 10.9% y/y increase of imports, which was boosted by the strong investment growth, as well as by rising private consumption. In the meantime, exports expanded by 10.0% y/y with the biggest contribution coming from the 68.2% y/y increase of mineral products exports, which was supported by low base effect.

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