The resilience of Latvian exports tested also in November
According to the data of the Central Statistical Bureau (CSB), the external trade turnover in November 2015 dropped by 3.8%, month-on-month, with the goods export and import values dropping by respectively 5.8% and 2.0%. Year-on-year, the goods export value rose by 2.2% and their import value decreased by 2.8%.
Even though the international situation is tense and the recovery of the external demand is very weak, the Latvian exports increased in the first eleven months of the year by 1.2% year-on-year. Optical and medical equipment were positive contributors to exports, as were cereal products, mechanisms and electrical equipment, chemical industry products, including pharmaceuticals, timber products and furniture, plastics, paper products and construction materials. The actual amounts of Latvian manufacturing and exports still point to stability, notwithstanding geopolitical challenges and the changed situation in the markets of Russia and its satellites, as the drop in exports to these countries is compensated with a rise in other markets.
The successful functioning of wood processing has fostered the growth in manufacturing and goods exports for two consecutive years. That was accomplished by improving the efficiency of production, finding new markets and increasing the proportion of high added value products both in this branch and in exports.
November is the third consecutive month where month-on-month positive growth was observed in the exports of foodstuffs. According to the information of the Ministry of Agriculture, the producers of foodstuffs have not sunk into depression after the drop in Russian demand and the introduction of Russian sanctions and continue to vigorously search for new ways to sell their products. As a result, 16 new markets have been found and activities have been expanded in the current ones.
Of the largest food industry enterprises, the success stories have been most outstanding for the confectionary producer Laima and the fruit and vegetable manufacturer Spilva. This is borne out by the growth of the presence of these enterprises in the export markets, the investment projects they have carried out, as well as their new products in the domestic and export markets. Owing to the largest cereal crops of all times in Latvia, the exports of cereals had an important positive effect on external trade in September, October and November.
Another positive factor that supports the resilience of Latvian exports is the Latvian market shares in world imports, which, according to the data of World Trade Organization and Eurostat, resumed growing in the second half of this year after stagnating for almost 18 months. The growth of market shares has resumed not only in total imports of EU 28, but also in the imports of the main trading partners (Estonia, Lithuania, Germany, Poland, Finland, Denmark, the Netherlands, the Czech Republic) and other countries. Regarding particular kinds of goods, the rise in market shares was ensured by manufactured goods, as well as food and animal products and mechanisms and transport equipment.
The goods imports continue to stagnate, practically remaining at the level of 2014 in 2015: in the first eleven months of the year, there was a small drop of 0.5%. The rise in domestic private consumption has not exerted a significant pressure on the imports of consumer goods as might have been expected, but that could indicate that Latvian dependence on imports has diminished, increasingly substituting imported consumer goods with ones produced in Latvia. That could also indicate that the rise in private consumption is increasingly being supported by the demand for domestic services. The drop in the imports of capital goods, on the other hand, is related to a weaker new investment activity; yet investments are needed for sustainable growth of exports and the economy.
It is expected that in 2015 overall, the Latvian goods exports will demonstrate a slight rise. The irregular growth of the global economy, weak external demand and the sluggish introduction of investment project is Latvia is one of the main risks to sustainable growth of Latvian exports and economy at large also in the future.