Exporters face double dip economy

TALLINN - Estonian exporters could be in trouble due to the fact that several large export markets are preparing for budget cuts, at the same time consumption and the demand for exports, including for Estonian products, drops, reports LETA-BBN, referring to a recent poll. Several Estonian economists said that funds that the governments have been injecting in their economies are at low point now and states need to start repaying their loans.

Estonian economist Heido Vitsur is confident that this is going to affect Estonian exports and will slow down the country’s economic recovery. “There is no doubt that our economic recovery has been based on growth of foreign demand, as domestic demand continues to decline. Now the global demand is weakening and this is going to affect Estonian exporters. It is no surprise, since the aid packages helped countries to overcome the worst of the crises, but have not resolved the imbalance of the global economy. There is simply too much debt that needs to be repaid. This means that consumption is set to fall,” warns Vitsur.

“Excluding small and micro enterprises, which are notably flexible in developing and offering products, the only large manufacturing enterprises that have made the news recently are Elcoteq, that restored its production in Estonia, and Ericsson,” he notes.

Peeter Koppel, an analyst at SEB, says that the world economy was clearly following a ‘W-shaped’ recovery, meaning that there will be a new downturn. According to Koppel, on the positive side, Estonian companies are meeting the new downturn in foreign demand stronger than in the last crisis. “Our companies are more efficient, productivity is growing and wages are no longer at unrealistic levels. Therefore, we are better prepared for new setbacks.”

Exports of Estonian goods in April grew 37 percent over the same month a year ago, to 10.6 billion kroons (679.4 million euros), while imports increased 18 percent to 11 billion kroons, according to data at Statistics Estonia.
In money terms, exports increased by 2.9 billion kroons and imports by 1.7 billion kroons compared to April 2009. Compared to March, exports increased by eight percent, but imports decreased by 12 percent.