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Monday, May 26, 2008

Estonia External Trade March 2008

The rate of increase in Estonias exports fells back again in March, with exports rising at an annual 2 percent rate compared with an annual 8% increase in February. Not entirely unexpectedly imports plummeted over March 2007 (though they were running at the highest level since last November), falling at a 10 percent annual rate.

In March 2008 the share of the EU countries was 73% and the share of CIS countries accounted for 12% of the total exports (in the previous year 70% and 12%, respectively). Compared to the previous year, exports of goods to EU countries increased 7%, but to CIS countries decreased 4%. The main countries of destination were Finland, Sweden and Latvia.

In total imports the share of the EU countries was 81% and that of CIS countries 11% (in the previous year 76% and 16%, respectively). Imports from the EU countries decreased 3% and from CIS countries even 38% compared to March 2007. The biggest decrease was in the imports from Russia and Finland (by 1 and 0.3 billion kroons, respectively). The most important partners in imports were Finland, Germany and Sweden.

Estonia's trade deficit widened in March to 3.3 billion kroon ($330 million) compared with 3.0 billion krooni inFebruary, the first increase since December, although the deficit was down by 1.7 billion kroon on the 5 billion kroon deficit registered in March 2007.

Weakening exports will obviously compound the problems Estonia faces after GDP growth slowed to an annual 0.4 percent in the first quarter. With domestic demand shrinking, export strength is now the key issue. Since energy imports will remain a significant drag it is going to be hard work reducing the deficit while oil prices are so high, and GDP growth is really produced by the excess of exports over imports. So at the moment things look pretty difficult on all fronts.

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