Mertsina: Estonia's market share for goods in Europe is increasing

TALLINN - Although Estonia's total export of goods increased by five percent in October, this was driven by strong growth in re-exports, while the export of goods of Estonian origin actually decreased by three percent, said Swedbank's chief economist Tõnu Mertsina.

"This marked the fourth month of decline this year. However, the decrease in October was largely due to a high comparison base from the previous year. Over the first ten months of this year, total goods exports from Estonia have increased by nearly seven percent, while exports of Estonian-origin goods have grown by three percent," Mertsina noted.

The decline in exports of Estonian-origin goods in October was most influenced by a decrease in the export of cereals and mobile communication equipment (5G devices). Without these two product groups, exports would have actually increased by nearly two percent in October. Exports of mobile communication equipment surged in the last quarter of last year, which raised the comparison base to a much higher-than-usual level.

"The decline in exports of mobile communication equipment is mainly due to the US market. Although exports of this equipment to the US decreased by 70 percent year-on-year in October, the volume was still nearly six times larger than two years ago. While exports of mobile communication equipment are quite volatile, cereal exports are even more so. This year's cereal exports were impacted by the exceptionally large volume of exports in October and November of last year," said Mertsina.

By country, the largest drop in exports of Estonian-origin goods was seen in the US market, while exports to Spain and Sweden grew the most. The growth in exports to Spain was mainly driven by-once again-cereal exports, whereas exports to Sweden were primarily supported by mobile communication equipment. Although Sweden's real estate market remains weak, exports of prefabricated buildings, wood products, and iron and steel products also saw a slight increase, Mertsina noted.

According to Estonian industrial companies, their export orders are gradually improving. Although economic growth in the eurozone is expected to slow slightly next year, and the Finnish and German economies will see modest growth, the outlook for the economies and demand in Sweden, Latvia, and Lithuania is more positive. "This suggests we can expect foreign demand to continue growing next year, which in turn will enable companies to export. Estonia's market share for goods in the European Union-the destination for three-quarters of our exports-declined between 2022 and 2024, but is now on the rise again, indicating a slow recovery of our competitiveness," Mertsina added.