Merchandise trade deficit widens by 4.1% y/y in Estonia

The merchandise trade deficit widened by 4.1% y/y to EUR152.7m in May, according to data published by the stat office on Monday. Import growth steepened to 13.9% y/y, recording four-month high. Imports of mineral products surged by 62.8% y/y, likely affected by increased industrial production. In the meantime, food imports rose by 14.2% y/y, affected by higher food prices and likely by higher re-exports. Machinery imports reported small growth of 0.3% y/y, suggesting that there was no tangible strengthening of investment activity during the month. Considering this, we believe that GCF growth slowed down in Q2. The main trade partners were Finland (12% of total imports), followed by Germany (11%) and Lithuania (9%) and Sweden (9%).

On the export side, total exports rose by 15.4% y/y, suggesting that the significant growth of industrial output remained largely driven by stronger external demand. The biggest contribution came from mineral products, which went up by 75.8% y/y. Other significant growth rates were reported by exports of food (15.9% y/y), chemical products (19.0% y/y), wood (21.7% y/y) and vehicles (23.9% y/y). The main export destinations were Finland (12% of total), Sweden (14%) and Latvia (9%). There was tangible decrease of exports to Sweden (19% y/y), which was offset by the 53% y/y growth of exports to Russia, which was boosted by the strengthening economic activity in the country.

The merchandise trade deficit amounted to EUR 2.6bn (11.9% of GDP) in Jan-May compared to EUR752.3m (3.7% of GDP) in the corresponding period last year. This reflected 12.0% y/y growth of imports, which were boosted by rising private consumption and investments. On the other hand, exports rose by 9.7% y/y due to the bettering external economic environment.

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