Weak external demand and geopolitical uncertainty to keep affecting Latvian exports - Economics Ministry

RIGA - In the following months of this year, weak external demand and geopolitical uncertainty will keep affecting Latvian exports, Edmuds Gergelevics, an analyst at the Economics Ministry's analytical service, told LETA.

According to the Central Statistical Bureau (CSB), in July 2023, the value of Latvia's exports of goods at current prices fell by 15 percent year-on-year. The value of July imports of goods was 19.6 percent lower than a year earlier. Exports fell for the fourth consecutive month, while imports fell for the fifth consecutive month. Latvia's trade gap was 13.5 percent in July.

The value of exports of mineral products and wood and wooden products fell significantly year-on-year in July. Exports of iron and steel products, machinery and equipment, milk and dairy products and furniture also contracted. In contrast, exports of perfumery and cosmetics, live animals, cereals and flour products, footwear and oilseeds increased.

In July, exports to EU countries fell by 17.1 percent year-on-year. The exports to Lithuania fell at the fastest rate, as exports of mineral products and dairy products were down. Exports of wood and furniture to Sweden, exports of mixed chemical products and wood to Italy, exports of mineral products and wood to Estonia, exports of wood  to Germany and exports of mineral products and wood to Finland fell as well.

However, exports of mineral products increased to Hungary, exports of beverages increased to Cyprus and exports of wood increased to Ireland.

Exports to CIS countries also decreased by 10.2 percent in July . Exports to Russia, where pharmaceuticals and electrical equipment and machinery were exported, decreased significantly. Latvian export to Russia include mainly beverages, pharmaceuticals, clothing and accessories, perfumery and cosmetics, as well as other goods not included in the sanctions list.

Exports to Kyrgyzstan, however, increased, as Latvia shipped plant parts, roots, machinery and equipment to this country. Exports of fertilizers to Moldova grew as well. 

Exports to other countries also fell in July, by 10.3 percent. In this group of countries, the sharpest drop in export value was to the United Kingdom, which receives wood, aircraft and their parts from Latvia. Cereal exports to Saudi Arabia also contracted.

However, the value of exports of non-specified goods rose to Ukraine, exports of iron and steel rose to Turkey, and exports of cereals rose to Côte d'Ivoire and Senegal.

In July, the value of imports of mineral products continued to decline significantly year-on-year. Imports of metals and fabricated metals, wood and wood products, chemicals and plastics also declined, in line with the previous month. On the other hand, the value of imports of vegetable products, vehicles and food products increased.

Overall, in January-July 2023, exports of goods were 5.8 percent lower than in the first seven months of 2022 at current prices, while imports of goods fell by 6.5 percent over the same period.

In this situation, it is necessary to continue to look for new supply opportunities and sales markets, Gergelevics said.