10.07.2013.

In external trade, the negative impact of AS "Liepājas metalurgs" and external environment is felt

In May 2013, the Latvian external trade turnover of goods dropped, as exports decreased by  4.5% and imports by 9.8% month-on-month. The drop in goods external trade activity was the result both of a weakening external demand and the deterioration of trade conditions.

In May, goods exports grew a mere 0.1% year-on-year. Compared to April, goods exports in May was favourably affected by rises in the exports of transport vehicles, food industry production, textiles and textile products as well as construction materials. The substantial growth in the exports of transport vehicles was determined by the exports of ships related to the launch of the passenger ship built at AS "Rīgas Kuģu būvētava" and purchased by a Russian company. Year-on-year growth in goods exports persisted for food products, textile products, construction materials, mechanisms and electrical appliances. A negative impact was felt by the drop in the exports of base metals and metal products related to AS “Liepājas metalurgs” halting operations starting May. The annual growth of goods exports, metal industry excluded, was at 6.5%, which remains a good indicator. The weak growth of several European Union (EU) countries is beginning to be gradually reflected in Latvian export, for a drop is observed in exports to all main EU trade partners. The good news is that exports to the CIS countries, including Russia, Kazakhstan, Uzbekistan and others as well as to the Nordic countries, Sweden and Norway, continue to grow, indicating that Latvian exporters know how to reorient themselves to different export markets.

In May, goods imports continued to drop both month-on-month and year-on-year, which is related to the production volumes dropping in export-oriented businesses and their therefore reduced need for raw materials. A month-on-month drop was observed in almost all groups of goods, except construction materials and textile products.  Year-on-year, the good growth of domestic consumption and rise in consumer goods imports failed to compensate the drop in the imports of intermediate consumer goods and capital goods.

The confidence indicators published by the European Commission (EC) point to a small improvement in the evaluation of export orders in June and to a rise in the EC-aggregated business confidence indicator. These positive signals pointing to an improved situation in the EU countries, including our main trading partners, as well as the goods exports stability that has been hitherto maintained, not much affected by the drop in external demand, give reason to hope that if not rising substantially, goods exports will continue to remain at current volumes. Metaphorically speaking, Latvian exports and export businesses are like unrelated floats that are trying to stay above water, but, in order for them to hold up the Latvian economy so that it can withstand the bigger and smaller waves caused by the unstable external environment, exports with a greater value added become increasingly important. Equally important is the overall industrial policy, which includes attracting investments, developing the infrastructure, adopting appropriate legislation and taxation policies.

Already now, Latvia’s greatest export market is the EU and most external trade transactions are conducted in euro, thus the final resolution adopted by the EU council of finance ministers of 9 July regarding accepting Latvia into the euro area on 1 January 2014 will not bring substantial changes in external trade. With the euro introduction, however, the competitiveness of export-oriented businesses could strengthen; financing will become more accessible to businesses, and, as currency risks disappear and the financial market becomes more integrated, confidence of the international public, experts and investors in the stability of Latvian economic and financial policies will increase

APA: Pelēce, D. (2022, 27. may.). In external trade, the negative impact of AS "Liepājas metalurgs" and external environment is felt. Taken from https://www.macroeconomics.lv/node/2107
MLA: Pelēce, Daina. "In external trade, the negative impact of AS "Liepājas metalurgs" and external environment is felt" www.macroeconomics.lv. Tīmeklis. 27.05.2022. <https://www.macroeconomics.lv/node/2107>.

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