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International Internet Magazine. Baltic States news & analytics Tuesday, 15.10.2019, 12:08

Estonia's industrial growth slowing down – Luminor

BC, Tallinn, 31.10.2018.Print version
The growth of the production of Estonia's industrial enterprises may be slowing down, but external demand remains sufficient to support industrial growth, Luminor chief economist Tonu Palm said, cities LETA/BNS.

"Industrial confidence in the euro area compared to a year ago clearly indicates that growth is going to be more moderate in the second half of this year; at the same time, deceleration is happening when the speed is exceptionally fast. The growth in the volume of Estonian processing industry in the last three months reaches 3.4%, compared to last year. With a growth rate like this, we remain among the most successful ones in Europe. Also for the coming year, we predict relatively good growth of external markets, including a slightly lower than 2% development of the euro area economy. Rapid growth will become more moderate. That leaves sufficient opportunities for the growth of export dependent industry," Palm told.

In addition to external demand, the internal market has also been seeing a swifter increase in orders already for some time, Palm said. "The construction market's vigorous growth in volume has played a part, too, yet its contribution is decreasing moderately. The U.S. industrial sector is doing even better than the euro area, thus we are still in an environment of growth in the developed countries, which is accompanied by a decrease in underemployment," he added.

The chief economist of Luminor said that it's still too early to conclude that deceleration in the growth of international trade is having an impact on Estonian industry.

"The growth of the eurozone economy shows a continuous moderate upward trend. The euro area and the Estonian economy are definitely supported by private consumption. Raising exports at the previous rates will become a bit more of a challenge as the growth rates of the economies slow down. Meanwhile, global economy as a whole is growing at a continuously good rate in comparison with the long-term average," Palm said.

In September 2018, the production of industrial enterprises increased by 2% compared to September 2017, production increased in manufacturing and energy, but decreased in mining, Statistics Estonia said on Wednesday. The total production in manufacturing was 2% higher compared to September 2017. Over a half of the industry's branches exceeded the volume of the same month of the previous year.

Compared to August 2018, the seasonally adjusted total industrial production decreased in total by 1% in September. Production of manufacturing also fell by 1% compared to the previous month.

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