Latvian exporters stand their ground in the global market

According to the Central Statistical Bureau of Latvia (CSB), in May 2015 the export and import value of goods declined by 11.7% and 7.2% month-on-month respectively and posted a fall of 2.8% and 0.9% year-on-year respectively.

In the first five months of 2015, exports of goods grew by 2.0% year-on-year, posting an increase in exports of machinery and electrical equipment, products of chemical industry, building materials, timber, plastic, furniture, etc. Considering the relatively high level of external uncertainties, the situation in Russia and Greece's financial problems, growth in exports of goods should be seen as a positive development. However, the value of imports of goods continued to decline as compared to the respective period of the previous year.

In 22 June 2015, the Member States of the European Union (EU) agreed to extend the period of sanctions imposed on Russia until January 2016. In response, Russia issued an announcement about an extension of the embargo on food imports from the EU for one year.

In 2014, Latvia's total exports of goods expanded by 2.3% despite the imposed sanctions, while exports of goods to Russia contracted by 5.6%. This year, the situation remained similar: in the first five months, Latvia's total exports grew by 2%, whereas exports to Russia declined by 20.3%. Contracting exports of goods to Russia were offset by an expansion in exports to Lithuania, Denmark, the UK and the US. This trend suggests that overall exporters have offset the lost opportunity for food exports to the Russian market relatively successfully.

The financial problems of Greece do not have a direct effect on Latvian exports of goods either, since Greece is not an important external trade partner for Latvia: exports of goods to Greece constitute only 0.2% of Latvia's total exports, while the respective share of imports in Latvia's total imports is even less significant (0.07%). Problems of Greece's economy notwithstanding, Latvia's exports of goods to Greece grew by 43.6% and 48.3% in 2014 and in the first five months of 2015 respectively. Latvia could only be exposed to an indirect negative effect, e.g. cautious sentiment of households and companies may decelerate growth in the euro area and thus also in Latvia.

Sustainable growth in Latvia's exports of goods largely depends on investment. Overall, in Europe, inter alia in the Baltic states, investment environment is recovering which also means a positive development for Latvia. In spite of persistent external uncertainties, several companies continue to invest in their business development un acquisition of new export markets. For instance, JSC Dobeles dzirnavnieks is planning to invest 7 million euro in its development this year, projecting a 10% rise in turnover and an expansion in exports to developing countries. Meanwhile, Madara Cosmetics Ltd. with the support from the EU structural funds is investing 1 million euro in manufacturing equipment. At the end of June, several Latvian companies such as JSC Laima, JSC Brīvais vilnis, Gamma-A Ltd., Karavela Ltd., etc., successfully participated in one of the largest manufacturing exhibitions in the world, the specialty food show Fancy Food Show 2015 in New York. Participation in such exhibitions may help to strengthen their positions in the US market, also arousing the interest of other countries.