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Friday, January 23, 2009

Estonia's Exports Down Again In November

Well, there is nothing really surprising here. The people who advocated keeping the peg knew what they were getting into, didn't they? Exports and imports were down sharply in November, and there is obviously a lot more to come. So we should expect to see some pretty shocking GDP numbers in the coming quarters. The only surprising thing, perhaps, is that Estonia’s trade deficit still widened in November (from October) as exports fell to their lowest level in the whole year due to waning foreign demand for cars and fuel. The deficit ballooned to 3.08 billion krooni, which compared with a revised 2.58 billion krooni in October. Exports fell an annual 19 percent, and imports declined 20 percent.

Estonian PM Andrus Ansip also acknowledged in a press conference yesterday (Thursday) that one of the reasons for the deterioration of the current crisis in the country is that some of the governments in some export markets such as Ukraine, Russia, Sweden and UK have gone for allowing their currencies to weaken against the euro.

“Before our very eyes, some of Estonia’s export markets practically have ceased to exist for us,” Prime Minister Andrus Ansip told a news conference yesterday. “The crisis and difficult times have reached Estonia.”

Estonia’s economy contracted an annual 3.5 percent in the third quarter, the second-weakest performance in the European Union behind Latvia. Exports of cars, which are shipped from western Europe for re-exports to neighboring Latvia, Lithuania and Russia, fell an annual 32 percent. Fuel exports, mainly of Russian oil products, declined 30 percent. Exports to Latvia and Lithuania fell 36 percent, and 21 percent, correspondingly.

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