Monday, June 30, 2008
While I am here, the EU Economic Sentiment Index for June has now been published, and here is the principal chart for the Baltic countries.
Latvia seems to have now overtaken Estonia on the downward charge, with Lithuania still some way behind, evn if it is catching up fast.
Thursday, June 26, 2008
In May 2008 the export price index was effectively stationary when compared to April 2008 and rose by 4.3% compared to May 2007.Month on month the export price index was mainly influenced by an increase in the prices of chemical products, rubber and plastic products and metal products and by a decrease in the prices of peat and peat products, food, textile products and wood and wood products.
In May 2008 the percentage change in the import price index was 1.5% compared to April 2008 and 6.2% compared to May 2007. Month on month the import price index was mainly influenced by increases in the price of mineral fuels, chemicals and chemical products and metal products and by a decrease in the price of agricultural products and of wood and wood products.
Interestingly, at least in the tradeables sector, Estonia is no longer exporting inflation, but rather importing it, since the rate of price increase in exported goods is now below the rate for imported ones.
Goods imports of goods ran to 15.8 billion kroons, which was 0.2 billion kroons or 2% up on April 2007. One of the main reasons of the slowdown in the growth of imports was the decrease of imports from Russia by nearly one billion kroons (45%).
The trade deficit in April was 3.6 billion kroons. Compared to April 2007, the trade deficit was down by 1.6 billion kroons — mainly caused by the faster growth of exports than of imports.
In April 2008 EU countries had 69% share in the export destinations, while the share of CIS countries was up to 18% of the total exports (in the previous year these figures were 70% and 11%, respectively). Compared to April 2007, exports of goods to EU countries increased by 1.1 billion kroons (15%), and to CIS countries by 0.3 billion kroons (27%). The main destination countries were Finland, Sweden and Russia.
Exports to Latvia were down 20% and to Russia up by 23%.
In total imports the share of the EU countries was 82% and that of CIS countries 13% (in the previous year the figures were 77% and 16%, respectively). Imports from the EU countries increased by over a billion kroons (9%), at the same time imports from CIS countries decreased by 0.8 billion kroons or nearly by one third. The biggest increase (0.3 billion kroons) was announced in imports from Lithuania. The most important sources of imports were Finland, Germany and Sweden.
In both exports and imports the most important section was machinery and equipment which accounted for around one fifth of the both flows. The largest increase in imports was for raw materials and chemical industry products, machinery and equipment and metals and products thereof.
Monday, June 9, 2008
Gross domestic product rose a revised annual 0.1 percent in the first three months of 2008, compared with a preliminary 0.4 percent reported on May 14 and 10.1 percent annual growth rate a year earlier, according to the Tallinn-based Statistics Office said on today.
Adjusted seasonally and for working days, the economy shrank 0.5 percent from the fourth quarter.
Estonian economic growth, which was the fastest in the European Union in the second quarter of 2006, is now the slowest and may well already be in recession. Accelerating inflation, slumping consumer confidence and tighter lending have all helped stall retail sales, squeezed manufacturers and cooled the housing market after a spending and investment boom which really got started after Estonia joined the EU in 2004.
``A hard landing scenario has already materialized in the Estonian economy,'' Lars Christensen and Violeta Klyviene, economists at Danske Bank A/S,said ``We expect a negative growth performance in 2008 and only marginal improvement in the next year.''
The International Monetary Fund said last month that Estonia's economy may contract this year and the government will have to ``significantly'' cut spending in coming years balance the budget.
Consumer spending shrank 0.4 percent in Q1 2008 from a year earlier, led by lower spending on transport, clothing and alcohol and tobacco, the statistics office said. Exports fell 5.4 percent, mainly due to a decline in Russian oil shipments and related sea and railway cargo transport services.
Russian oil shipments through Estonia have fallen by a third since May 2007 after a Soviet war memorial was removed from Tallinn's city center, sparking protests from some members of Estonia's Russian-speaking minority and the Russian government.
Friday, June 6, 2008
The pace of inflation, driven by a surge in wages following an economic expansion which ran at an 8.7 percent average from 2000 to 2007, has more than doubled in a year. Rising prices are adding to the pressures on domestic consumption even as a credit crunch has been slowing growth to an annual 0.4 percent in the first quarter, the European Union's second slowest after Italy.
In May 2008 compared to May of the previous year, the prices of goods changed by
10.4%, of which the prices of food by 16.2% and the prices of manufactured goods
by 5.9%. The prices of services increased 12.9% during the year. Regulated
prices of goods and services changed by 20.5% and non-regulated prices by 8.7%.
The index was mainly influenced by the price increase of food, by the increase
in the expenditures on housing, as well as by the increase in the prices of
motor fuel. As before, dairy-, cereal- and meat products gave more than two
thirds of the price increase of food. The increase in the expenditures on
housing was mainly influenced by the increase in the prices of heat
Tuesday, June 3, 2008
In comparison with March, total retail turnover in April 2008 was up by 2.3%, according to data from the Central Statistical Bureau. This growth was recorded in almost all commodity groups.
Retail trade of food products was up 0.2%, and non-food products were up 2.9%.
Compared to April 2007, retail turnover was up in April by 1.2%2, and the main driver here was the increase in sales of non-food products (by 5.5%). Sales of food products were down by 5.8% year on year.
Compared to March, in April 2008 retail trade turnover of enterprises the main activity of which is the sale of motor vehicles, motorcycles and parts thereof increased by 10.2%1, and compared to April 2007 the increase was 4.2%.
In the months January – April 2008 the turnover of motor vehicles, motorcycles and parts thereof was down by 5.3% year on year: The volume of cars sold decreased by 10.8%, but sale of motor vehicle parts, as well the sale of motorcycles and motorcycle parts grew by 10.1%.
According to Statistics Estonia, in April 2008 compared to April 2007 retail sales were unchanged (ie 0% growth) at constant prices.
In April, the retail sales of goods of retail trade enterprises were 4.6 billion kroons. In grocery stores the retail sales of goods decreased one percent compared with the April of the previous year. Retail sales in stores selling manufactured goods increased by 2% compared with the same period of the previous year. Compared to April of the previous year, the retail sales of pharmaceutical goods and cosmetics increased 10%, the retail sales of stores selling textiles, clothing and footwear and also of stores selling household goods and appliances, hardware and building materials increased 1%. Retail sales of non-specialized stores selling industrial goods and retail sales of other specialized stores stayed at the same level compared to April of the previous year.
Compared with March, retail sales increased by 1%.
In April the revenues from sales of retail trade enterprises were 5.5 billion kroons, of which retail sales of goods accounted for about 85%. Compared to April 2007, the revenues from sales increased 9% at current prices.
Sunday, June 1, 2008
Due to the growth in the basic tax allowance and tax relief on dependants, net wages and salaries increased more rapidly than gross wages and salaries. Compared to the 1st quarter of previous year, net wages and salaries in the three months of this year increased by 29.7% and reached on average 330 lats.
However when we take into account the consumer price growth of 16.4% in the first quarter, then we can see that the real increase in wages and salaries during the period was considerably less: 11.4%. If we look at the chart below where we can see the evolution in real wages month by month, it is clear that the rate of increase in real (inflation adjusted) wages has now been declining since last summer, and continues to do so. This declining rate of increase is however far from sufficient to guarantee the competitiveness of Latvian exports, but then, we will cross that bridge when we - more or less inevitably now - get to it.
Gross wages and salaries witnessed more rapid growth in private sector – by 28.6%, compared with 27.2% in the public sector.
Private sector monthly average wages and salaries were, however, still lower than in the public sector. Average public sector salaries were 516 lats in Q1. Compared to the first quarter of 2007, the increase was 110 lats. In the private sector the numbers were 424 lats and 94 lats, respectively.
It should be mentioned that the difference between wages and salaries of private and public sectors is growing. If in the 1st quarter of 2007 wages and salaries in the public sector were 76 lats higher than in private sector, in the 1st quarter of this year this difference was up to 92 lats.
Should this trend continue then it will of course eat into private sector competitiveness since the cost of public sector wages has to be paid for in some way out of non-wage costs in the private sector.
Looking at the breakdown in wages rises by kinds of economic activity compared to the 1st quarter of previous year the most rapid increase were in education - up by 32.1% (from 327 to 432 lats), transport, storage and communication – up by 31.4% (from 372 to 488 lats), commercial services – up by 30.0% (from 378 to 491 lat), construction – up by 28.7% (from 323 to 416 lats) and trade – up by 28.0% (from 297 to 380 lats).
Compared to the 4th quarter of previous year, in the 1st quarter of this year gross wages and salaries in the country grew by 1.6%. In private sector wages grew by 8.3%, but in public sector they were down by 8.6%. The decrease may be explained with the fact that annual and holiday bonuses are paid in the 4th quarter.
Among the Baltic States the highest gross wages and salaries in the 1st quarter of this year - as in all quarters of previous year - were recorded in Estonia (788 euro), while the lowest were registered in Lithuania (623 euro). Compared to the 1st quarter of 2007, Latvia witnessed the highest rate of increase (28.1%), with Lithuania at 23.8%, and Estonia at 19.5%. Compared with the 4th quarter of 2007, the highest rate of increase during the first three months of this year was in Lithuania (4.8%), with Latvia registering 1.6%, and Estonia 0.5%.