Despite the unfavourable conditions, exports of Latvian goods are on the rise

Despite the drop in growth rate and even volumes of production in most branches of manufacturing and problems in metal production, exports of Latvian goods continue to rise. In April, goods exports grew 5.0% month-on-month, with the annual rise at 17.5%, which is a very good indicator against the unstable external environment.

In goods exports, the fastest month-on-month increase was observed for the exports of food industry products (primarily of alcoholic beverages to Russia), animal products (dairy products, meat), wood pulp, construction materials, mechanisms and electrical equipment.  Year-on-year, an increase was maintained for practically all export goods groups important for Latvia, except transport vehicles.

Even though after the deterioration of business future evaluation in April, the evaluation of orders and output volumes expected in the future improved, it must be noted that this improvement was mainly because of domestic demand, since the evaluation of export orders remained at the previous month’s level. Despite the fact that the largest branches of Latvian exports, wood pulp and metals are currently facing global scale contraction of production, both the producers of metal constructions and wood processing enterprises are continuing expand their exports to Denmark, Sweden, Norway, Great Britain and Iceland where there is enough state procurement. In these countries, infrastructure objects – hospitals, schools, kindergartens, sports halls as well as various industrial sites – are seriously being developed.  That means that the ability to flexibly react to the changes in external environment is a substantial advantage of Latvian exporters helping them to maintain external competitiveness even in an unfavourable global situation.

In April, the drop in the import value of goods by 0.5% month-on-month was primarily the result of a drop in imports of mineral products and transport vehicles. The slight drop in the imports of metal products was probably related to the drop in the production volumes of AS "Liepājas metalurgs" and thus a lesser need for raw materials.

Speaking of future perspectives, it should be noted that different trends are observed in the development of the economies of Latvia’s main trading partners. In Lithuania, economic activity is primarily determined by private consumption, even though exports too, because of competitiveness, continue to rise, albeit at a slower rate. In Estonia a pressure from costs is appearing brought on by a rapid rise in salaries, which may slow down our neighbour’s growth. In Sweden, economic recovery is proceeding very slowly, as the export and investment growth is slowing down while household expenditures are growing despite rising unemployment. In Denmark and Finland, domestic demand is weak and substantial increases are not observed in exports. Economic growth has slowed down also in Russia, Poland and Germany.

On the other hand, Latvian producers have time and again shown their ability to achieve substantial rises in export volumes in spite of unfavourable conditions. Moreover, in future, a positive contribution to export could be the 30 May decision of the Council of Ministers of the Organization for Economic Cooperation and Development (OECD) to start membership negotiations with Latvia. An OECD member status will promote the country’s recognisability outside the European Union, which, in turn, will make Latvia even more attractive for investment and will facilitate its access to the credit markets for the financing of projects important for the economy. On 28 May,the  Latvian government lent its conceptual support to the project for export promotion and attraction of foreign investment for 2013‒2019 where increased competitiveness, support for increasing external market shares and promotion of foreign direct investment are highlighted as the main courses of action. Carrying it out in practice is the only thing that remains. 

APA: Pelēce, D. (2024, 24. apr.). Despite the unfavourable conditions, exports of Latvian goods are on the rise . Taken from https://www.macroeconomics.lv/node/2114
MLA: Pelēce, Daina. "Despite the unfavourable conditions, exports of Latvian goods are on the rise " www.macroeconomics.lv. Tīmeklis. 24.04.2024. <https://www.macroeconomics.lv/node/2114>.

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