Foreign trade: exports expand
In March 2011 the goods trade turnover – both exports and imports – grew substantially in Latvia. A stable foreign demand, the ability of Latvian enterprises to compete successfully with the producers of other countries as well as the rise in export prices combined to achieve a new record in exports. In one year, exports have grown 38.5% and imports 39.0%. The goods trade balance deteriorated slightly and imports exceeded imports by 122.3 mil. lats.
Compared to February, goods exports rose 19.6% in March. The greatest rise in exports was observed for wood pulp and its products: the highest wood pulp export indicator has been reached. The exports of grain, pharmaceuticals, transportation vehicles, mineral products, mechanisms and electrical devices also grew substantially. An essentially important factor in the development of industries and enterprises was the increase in export orders both in the EU and CIS countries. Some export-oriented enterprises are therefore planning to increase both their production capacities and turnover as well as open new export markets and increase their export volumes already this year. Entrepreneurs are asserting their competitiveness and continuing to increase the sales of their products in the already existing foreign markets, where demand is on the rise, e.g., Russia, Scandinavian countries and Germany, as well as conquering new markets. For instance, the producer of wood panel houses, SIA "Husvik", which exports its products to Norway, is planning to increase its production capacity by 40% in 2011, opening 25 new job vacancies and increasing its turnover by 30%; the producer of wooden window frames, "Flora", intends to expand its exports to Russia; SIA "Tolmets", which is in the scrap metal processing and wholesale business is looking to increase its exports to Asia. The grain processing enterprise "Dobeles dzirnavnieks" is also planning for export growth; the food and condiment producer, SIA "Spilva", has begun exporting to Azerbaijan; the producer of elastic medical supplies, SIA "Tonus Elast" is looking to find new clients in the Western markets.
The rise in imports was determined both by the growing demand for intermediate consumption goods in the export-oriented manufacturing industries and by the stabilizing of the domestic market. Compared to February, the rise in the imports of goods was faster than in exports. The increase in the groups of imported goods maintained the trend of previous months, with the imports of transportation vehicles, plastics and plastic goods, iron and steel, mechanisms and mechanical devices on the rise. The rise in the volumes of the imports of meat and offal as well as vegetables and fruit was substantial. Total imports, however, still lagged behind the pre-crisis levels.
In 2011, the growth in export-oriented industries will be more rapid than the average in the economy, but the rate of growth will gradually slow down. The outlook of associations of exporting industries and entrepreneurs is becoming more optimistic, but rises in the purchase prices of raw materials, limited financial means for investment and current assets, uncertainty caused by changes in taxation policies as well as the lack of qualified workforce all present obstacles for a successful development of exports in the long term. Global trade, including in Latvia's main trading partners, will continue to develop more rapidly than expected, but the resumption of foreign economic activity will be impeded by the fiscal consolidation measures undertaken by several EU countries, the growth of public debt and the uncertainty in the labour market.
The growth dynamics of exports and imports will continue along the same lines as before. Import growth will be determined by the development in production, increasing the imports of intermediate consumption goods, and by increasing investments. The domestic private consumption, on the other hand, will not promote import growth, remaining at a relatively low level.