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Ekonomiskā vide - 2021 04 19
export | development forecasts | coronavirus

Exports throw caution to the winds and maximise speed

Exports throw caution to the winds and maximise speed Photo: Cameron Venti, Unsplash

As the global superpowers regain their appetite, Latvian export figures have grown at a dizzying pace and will continue to do so in the months ahead. While the economy and businesses can cheer now, the future may still hold challenges.

In February, Latvia’s foreign trade turnover grew by 4.6%, including goods exports by 7.5% and imports by 2%.

At full speed

Performance in February has overruled all cautious forecasts while allowing for a somewhat more optimistic outlook for the economy in the first quarter, even if a downturn cannot be avoided.

Growth in the timber industry (+ 19.7%) has provided an impressive boost, with a significant impact on overall volumes.

The surge in demand has also led to an increase in prices. This promises good prospects for the economy and a profit for companies at least in the short term, as well as possible difficulties in the future.

The electrical equipment and machinery (+4.9%) and machinery and mechanical equipment (+6%) sectors have grown much faster and therefore appear to be more sustainable. The main challenge for these sectors is the ability to maintain the continuity of the process, that is, to protect workers from illness and to keep the various components available.

It is worth noting the increases in exports of fuels and oil (+ 39.8%), cereals (+ 56.1%) and pharmaceuticals (+ 35.8%). While it is uncertain whether the visible increase is sustainable in the long term, it will continue in the coming months.

Exports of vehicles, alcohol and iron and steel products have declined.

Superpowers are regaining appetite

February’s performance is all the more impressive given that exports were still in the growth phase last February, rising by 9.5%.

With export growth slowing in March and already showing a decline in April, the percentage increase will be staggering in the coming months.

Global giants China and the United States are quickly regaining traction, which is also slowing the recovery of exports from European and other countries. Companies are reporting a pickup in orders, which is also helping to improve overall sentiment.

In the short term, supply chain disruption may be the biggest challenge. The pace of deliveries has slowed significantly recently. This is driving up costs and bringing the issue of competitiveness into focus. Therefore, even stronger support to improve Latvia's export potential, which would benefit from the favourable economic situation, would be useful.

Dainis Gašpuitis
Economist at SEB

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