The drop in exports to Russia is compensated by other countries

According to the Central Statistical Bureau (CSB) data, the external trade turnover of Latvian goods grew by 13.3% month-on-month, with the export and import of goods rising by  12.2% and 14.2%, respectively.

Year-on-year, the export value of goods has remained practically unchanged,  dropping by a mere 0.3% compared to March of last year.  Even though the geopolitical situation in the East is still rather tense and the external market demand is weak, the exports of Latvian goods in the first quarter retained a slight rise: 0.4% year-on-year.  

In March, there was a month-on-month growth in practically all groups of export goods, except electrical equipment and electrical appliances. The greatest rise in the export of goods was seen for wood and its products, knitted wearing apparel (knitted socks and pantyhose to Poland for 5.5 mil. EUR), chemical industry products (export of mineral and chemical fertilizer to Togo for 4.4 mil. EUR), base metal products (export to Denmark, Lithuania, Estonia, Sweden etc. ), mechanisms, plastic products, and transport vehicles.  .

Even though month-on-month, the imports of goods in March saw a rise of 14.2%, the import value of goods continued to drop year-on-year  – by 3.7%.

The confidence indicators published by the European Commission (EC) indicate that business confidence in April improved substantially, for the evaluation of order volumes has risen fast and the evaluation of output amounts for the coming months has also increased.  The EC confidence indicator for export order evaluation for the second quarter remained unchanged, but, assessing their competitiveness, the evaluation of entrepreneurs has deteriorated in the domestic market, in the EU, and outside the EU alike. A downward pointing trend, however, has for the past couple of years been only observed for the competitiveness position outside the EU, which has been evaluated as dropping since 2013, but within the EU, competitiveness evaluation has been rather stable.

The dynamic of both exports and imports of goods in 2015 can still be negatively impacted by the economic recession of Russia, as the Russian demand keeps shrinking. The geopolitical conflict between Russia and Ukraine is still the determining factor in investor caution, making them delay positive decisions on making important investments. Over the past year, the Latvian exporters have had to work under conditions of increased stress, but many success stories are also apparent, for any crisis situation and complications may give rise to new opportunities and challenges. The current geopolitical situation may also be perceived in terms of new growth opportunities.  Business diversification and purposeful restructuring of operations may bring positive results to Latvian exports.

Several developments at the beginning of this year give rise to a hope that the drop in exports to Russia may be compensated by increased exports to other countries outside the EU and within the EU where growth is gradually taking hold. The Latvian goods exports will be positively impacted by the resumption of work at "KVV Liepājas metalurgs". Currently, 90% of "KVV Liepājas metalurgs" production is exported to Algiers, but it is gradually beginning to export also to Poland, Germany, and Finland.  At the beginning of this May, the steel foundry of  "KVV Liepājas metalurgs" also resumed work: manufacturing takes place in two shifts there, employing an additional 195 people and producing 30,000 tons of steel a month. Food producers, on the other hand, can now use the opportunity to export to China, for, at the end of April 2015, the webpage of the Certification and Accreditation Administration listed ten Latvian food producers who have been permitted to export to China several kinds of dairy products, for example, cheese, powdered milk, cream, and ice-cream. As of the middle of the year, four Latvian fish processing enterprises will have an opportunity to export their products to China.  Latvia has the capacity and every opportunity to offer high quality ecologically sound niche products. Businesses that are already successfully working in the Asian market indicate that the Asian market is not interested in cheap products but quality is in high demand, and Latvian entrepreneurs can offer that.  

APA: Pelēce, D. (2024, 23. apr.). The drop in exports to Russia is compensated by other countries . Taken from https://www.macroeconomics.lv/node/1968
MLA: Pelēce, Daina. "The drop in exports to Russia is compensated by other countries " www.macroeconomics.lv. Tīmeklis. 23.04.2024. <https://www.macroeconomics.lv/node/1968>.

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