Boston, MA -- (ReleaseWire) -- 04/29/2014 -- V-Shaped Recovery Taking Shape In Estonia
Based on developments and data over the last three months, we have further reduced our estimate for Estonian GDP growth in 2013, but we have boosted the outlook for 2014. In a nutshell, we believe Estonia is experiencing a V-like recession and recovery, and is well on its way to achieving good rates of expansion this year. We now estimate that GDP growth slowed to 0.8% in 2013 (down from 1.9% previously), and are predicting expansion of 3.2% in 2014 (no change) and 3.4% in 2015 (was 3.0%). In our view domestic consumption levels, which have been resilient in recent years, will continue quite strong as a result of low unemployment, low inflation, and progressive household debt deleveraging since the 2009 crisis. Taken together these factors will provide good support for domestic private consumption. The difference between 2013 and 2014 will be provided by exports: last year Estonia's main trading partners (the Nordics, the Baltics, and Russia) experienced sluggish growth but this year they will do better. We now expect real export growth of 6% (although imports will grow a marginally faster 6.2% because of the strength of the domestic market.
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In the ports and shipping sector, competition from the new Russian Baltic port of Ust-Luga continues to be a negative for Estonia's port of Tallinn. That said, oil shipments have stopped contracting and Ust-Luga's chief executive has maintained that Russian transit trade needs are growing faster than its Baltic port capacity, meaning there will still be business for Tallinn. Throughput at the Estonian port fell by an estimated 4.2% in 2013 and, we now expect it to register small but positive growth in 2014. The port authorities have claimed that a policy of diversification will eventually begin to pay off: certainly, container activity levels are set to remain strong, with double-digit percentage growth in 2014.
Headline Industry Data
- Port of Tallinn gross tonnage set to grow marginally by 0.7%, to 28.453mn tonnes in 2014, following a 4.2% fall in 2013.
- Box traffic at Tallinn to grow by 10.2%, to 279.548 twenty-foot equivalent units (TEUs) in 2014 - comparable to 11.3% growth in 2013.
- Estonian foreign trade to gain 6.1% in real terms in 2014, after 4.2% growth in 2013.
- Import growth will lead with 6.2% expansion, fractionally ahead of exports, which will be up by 6.0%.
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