TALLINN - Estonian industrial production increased in December at the fastest annual pace on record, helped by rising exports of electronics and electricity, reports Bloomberg. Production increased 38.5 percent from a year earlier, the biggest increase on record dating back to 2000, compared with a revised rate of 35 percent the previous month, the Tallinn-based statistics office said on Jan. 31.
Output rose 1.3 percent from the previous month on a seasonally adjusted basis.
The Baltic country’s industrial output has grown at the fastest pace in the 27-member European Union in past months after falling 26 percent last year, compared with an average decline in the EU of 13.9 percent.
The 14 billion euro economy, which is recovering from the second-deepest recession in the EU in 2008 and 2009, adopted the euro on Jan. 1 to boost foreign investment and trade. Economic expansion, at an annual 5 percent in the third quarter, depends on how domestic demand recovers in coming quarters as demand for exports may slow, the central bank and Finance Ministry said in November.
Electronics manufacturing, led by the Estonian plant of Stockholm-based Ericsson, which manufactures mobile network stations, soared an annual 252 percent and electricity output grew 70 percent in December, the data from the office showed. Estonia’s electricity exports to neighboring Latvia and Lithuania have grown after Lithuania shut down its Ignalina nuclear plant at the end of 2009.
Danske Markets, in its latest economic outlook, says that with the support of growing exports, the Estonian economy is recovering faster than expected, writes Postimees Online. Danske Markets’ senior Baltic analyst Violeta Klyviene stated that there is, however, a risk that the exports growth has already achieved its peak and unless the industrial sector will be able to attract additional investments, further growth could become problematic.
Thus far the export sector in Estonia has benefited from the fast recovery of Russian and Nordic economies. Nearly half of exports from Estonia go to the fast-recovering markets: nearly 19 percent to Sweden, 16 percent to Finland and 10 percent to Russia. “Sustainable economic growth will depend on the speed of the restoration of domestic demand, which would pull the recovery,” said the analyst.