Processing industry: an export engine in August
Processing industry apparently was the engine behind export developments; the flows of foreign trade have ceased to diminish rapidly for past several months, and the industry confidence indicators, including those relating to export opportunities, have been gradually improving.It can therefore be concluded that the lowest point in the downslide of goods exports may have been reached.
The nominal growth in exports (5.1% over July) was mainly determined by particular processing industry branches: the production and exports of wood pulp, paper, some chemical products were all on the rise in August. The increased exports of grain was a seasonal development. A relative stabilization, confirmed by branch representatives, can be observed in the production and exports of some types of clothing: after a prolonged, gradual decrease, the exports of knitted goods post a steep rise (over 48%).The August rise in exports also had a positive effect on the foreign trade balance, as imports contracted slightly (by 0.5%) over the course of a month.
If the lowest point has indeed been reached, a gradual trend upward may follow - but only with two provisos. First, the markets of our foreign trade partners have to continue to recover without any unpleasant surprisesand second, foreign partner confidence in Latvia must not deteriorate.
The prospects of service trade, given the developments regarding the Baltic Dry index, may also improve in the near future: after a worsening during the summer months, the value of this index has once again stabilized.
As for the global economy as it relates to the prospects for Latvian exports: overall there are signs of recovery and, which is equally important for what can be predicted for the near future, there have been no new protective measures that would act as obstacles in important trade partner countries. The export credit guarantee mechanism, which has been in place since recently, may have a positive, albeit small, effect on the activity in foreign trade transactions; the first guarantees have already been received (mostly for export to the CIS countries).