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International Internet Magazine. Baltic States news & analytics Sunday, 17.01.2021, 17:43

SEB: Pulp industry among most productive industries in Estonia

BC, Tallinn, 02.03.2018.Print version
Economic analyst at SEB Mihkel Nestor said that the productivity of Estonia's processing industry is more and more falling below the economy's average, but ironically, the pulp industry is one of the most productive industries in Estonia.

"Ironically, one of the most productive industries in Estonia at present is the pulp industry, exceeding also the IT sector in that regard, by the way. Here, it cannot be left unsaid that at times, the soft value fads of welfare states seem to arrive here faster than welfare itself," Nestor said in SEB's weekly comment.

He said that in the processing industry, the growth of added value remained slightly below the average of the fields, but compared to the two previous year, a 4% growth is nevertheless a good result.

"The productivity of the processing industry in Estonia more and more falling below the economy's average. In most European Union countries, the productivity of the processing industry is to the contrary higher than the average of the business sector. For our main examples, Finland and Sweden, the productivity of processing companies exceeds the country's average by 1.4 times, while in Estonia, the corresponding ration is near 0.75," Nestor said.

Regardless of the growth in the last few years, Estonia's labor expenses are very low compared to our main export markets, which allows to deal with production processes here, which have not paid off in the Nordic countries for a long time anymore.

Even though companies with low added value could be accused of keeping a hold of the workforce, no other significantly more productive alternatives have emerged next to them, where people could move to.

Along traditional industries, there are nevertheless new industrial branches with a better development perspective to be seen, but their impact on the economy as a whole is still very small. A lot could also be done in the current branches and companies by positioning their products in more expensive market segments.

"Along with the industry, the development of service economy is of course also a fully considerable alternative. The year 2017 was quite extraordinary in the sense that even though the volume of goods export doubly exceeds the export of services, the contribution of the latter into economic growth was twice bigger. At the same time, imagining a future Estonia without a well functioning industrial sector is very difficult. Inevitably, not every person will become a programmer and when the average wage increases, the price-based competitiveness of services will also decrease," Nestor said.

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