In september export still on the rise
At a time when global growth remains unstable and total demand in external markets is low, the export trade of Latvian goods have maintained impressive annual and third quarter growth rates, as a result of competitiveness regained during the producer crisis. In the first nine months of 2012, the export volumes of goods have increased by 12.6% and import volumes by 12.8% year-on-year.
In September of this year goods exports grew 4.7% and imports dropped by 2.1%. Annually, Latvian export growth reached 16.5% in September, which is an outstanding indicator, particularly given the instability in the external environment.
In September, however, differences appeared among groups of export goods: the growth in the value of some groups of goods, e.g., mineral products and wood pulp products has slowed down substantially as a result of the previously achieved high level of the rapid growth so far. Just like in August, the rises in grain prices in the global market promoted a rapid growth in plant product exports. Month-on-month, growth in goods exports was observed for base metals and transport vehicles. Such groups of export goods as wood pulp and its products, mechanisms and electrical equipment dropped in September by respectively 4.6% and 1.3% month-on-month, yet the annual growth rate remained positive at 1.1% and 13.2% respectively.
Even though a downturn has been observed in the European construction market, the natural disasters in the US may in the coming months act to promote the demand for construction materials in the US market. That could have a positive effect on Latvian construction materials exports, since in exports to the US, construction materials were the third to fourth largest group of export goods in 2011, or 7.8% of total exports to the US.
In September, goods exports posted the most rapid rise in exports to Germany, Russia, Norway and the Netherlands. In recent months, Latvian exports to the partners that are outside the EU have been growing faster. The current diversified structure of Latvian exports allows us to compensate, at least in part, the drop in the demand for imports in some European countries..
The annual rise of 3.0 % in goods imports in September was determined by a rise both in intermediate consumption goods imports and consumer goods imports as a result of more vigorous domestic demand. An annual rise in the goods imports is maintained for food products, textile products and wearing apparel, wood and wood pulp, mineral products, base metals and their products. A month-on-month drop in the value of Latvian imports was registered almost all groups of goods, with the exception of base metals, plant products and textiles.
Up to now, Latvian enterprises have been able to successfully compete with the producers of other countries and have not only increased their export market shares in the most important trading partners but also conquered new export markets. The complicated situation in the global markets, the protracted problems in the euro area and the slowdown in the growth of Latvia’s main trading partners has weakened external demand as well as impacted the confidence of Latvian entrepreneurs and consumers. The October and fourth quarter confidence data published by the European Commission indicate that the confidence of Latvian producers has deteriorated both in terms of trends regarding changing volumes of manufactured and expected production and export volumes and competitiveness evaluations outside the country. The euro area climate indicator BCI also dropped substantially in September and October, reflecting the negative outlook of producers regarding future export orders and employment expectations and delineating the weakening of external demand more sharply. In the maintenance of Latvian export growth, investments aimed at increasing the productivity of Latvian enterprises, employing new technologies, producing innovative products, improving competitiveness and creating products with a higher value added as well as expanding the existing export markets outside the European Union, e.g, in Asia, will play an important role. It is crucial to also continue expanding exports to Russia and the CIS countries (Belarus, Ukraine, Azerbaijan, Kazakhstan) where a good presence is already maintained by several Latvian enterprises, posting export increases every month.