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Friday, 19.04.2024, 16:34
External trade in August testifies to the power of Latvian cereal exports
In August, the export value of goods reached its highest level since November of last year. Goods exports benefited from the substantial exports of plant-based products for 91.7 mil. euro, including cereal exports to Algeria, Saudi Arabia, the Netherlands, Spain, Germany and France for a total of 58.2 mil. euro and rapeseed exports to Germany, Denmark, Finland, Lithuania, Norway and Sweden for a total of 16.7 mil. euro.
The substantial increase in cereal exports was fostered by a rise in cereal demand in the EU market and the record and the stocks of last year's record harvest in Latvia. In August, a greater or smaller month-on-month increase was observed in most groups of goods. Year-on-year, growth was positive for plant-based products, base metal products, transport vehicles, chemicals, animal-derived products, wood, foodstuffs and textiles.
Owing to the good export indicators in August, the drop in goods
exports in the first eight months of 2016 diminished year-on-year and
was 1.5%. The year-on-year growth in goods exports is still unfavourably
impacted by the drop in the exports of mineral products, mechanisms and
electrical equipment, textiles and base metal products. A positive
contribution to the growth of goods exports was provided by plant-based
products (primarily, cereals, rapeseed and vegetables), transport
vehicles (primarily, the one-off transaction with the yacht in July),
pharmaceuticals, wood products, animal-derived products (primarily,
fish), foodstuffs and construction materials. In a breakdown by country,
the greatest decreases in goods exports were observed to Lithuania,
Russia and Poland, whereas the greatest increases were to Denmark,
Sweden, Germany, Uzbekistan, Kenya, Estonia, France and Saudi Arabia.
Evaluating the prospects for Latvian external trade in 2016, no substantial growth in goods exports is expected. Judging by a study conducted by "Citadele Index" and other business surveys, Latvian entrepreneurs are not particularly optimistic overall and the greatest most pronounced pessimists are the enterprises of exporting branches. In entrepreneurs' opinion, the negative impact on export growth is not limited to the weak external demand in the trade partners; economic and geopolitical problems in the external environment, including the aggressive policies of Russia; the many unknowns related to the United Kingdom leaving the European Union; the drop in the exchange rate of the rouble and the British pound; the conflicts in North Africa and the Arabian peninsula and uncertainty regarding the outcome of the US election but also the lack of a stable taxation policy and bureaucracy, which is a crucial obstacle to Latvia's competitiveness. The export of agricultural and food products is unfavourably influenced by the developments in the global dairy market where the consequences of the Russian embargo and lifting of the milk production quotas are still felt as are the drop in the value of currencies of some countries and overproduction.
The geopolitical turmoil of recent years – the sanction war with Russia, Brexit, the war in Syria and flood of refugees in the direction of Europe – has changed not only Latvian but also global business environment, where transformations are inescapable and everyone will have to learn to adapt to them. As a result of a weaker demand, entrepreneurs have to increasingly rack their brain as to how the habitual export and import markets could be replaced, where new trade partners could be found and how productivity might be improved.
Despite the multitude of problems, there are enterprises that do not intend to rest on their laurels and that are planning to increase the proportion of export even more, reinforcing and expanding their positions both in Scandinavia and in Western Europe, which are considered prospective markets, and increasing their activities in Asia.