Latvia’s ex­ports on the rise in a time when the world is wor­ried about trade wars

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«Al­though the ex­port year com­menced with a high jump, it is not pos­si­ble to hold such a high bar through­out the en­tire year. Grow­ing ex­ter­nal de­mand will help, con­sid­er­ing sta­ble eco­nomic growth in our part­ner coun­tries,» pre­dicts Swed­bank econ­o­mist Ag­nese Buce­niece.

She says that Jan­uary’s ex­port re­sults in Latvia pro­vided a sur­pris­ing 18.1% jump when com­pared to the same month of last year. The most sig­nif­i­cant con­tri­bu­tion was pro­vided by ex­ports of turbo-jet and turbo pro­pel­ler en­gines and other gas tur­bines goods ex­ports to USA.

«If we take this ef­fect, which is likely an ex­cep­tion (sim­i­lar vol­umes were no­ticed in Septem­ber last year), out of the equa­tion, ex­port growth be­comes 13%. But even that is rapid growth. It is im­por­tant to note that it does not de­pend on a spe­cific group of ex­port goods. Growth was ob­served in nearly all of the largest ex­port groups – me­tals and their prod­ucts, mech­a­nisms and equip­ment, food and bev­er­ages, as well as wood and its prod­ucts,» says Buce­niece.

The econ­o­mist pre­dicts that growth rate will slowly start de­clin­ing. Then de­mand for Lat­vian goods will grow more slowly. «It is also be­com­ing harder for ex­porters to in­crease pro­duc­tion vol­umes, be­cause at the cur­rent in­vest­ment level the econ­omy will fo­cus more on re­stric­tion of pro­duc­tion out­put and labour force availability. Be­cause of that, we ex­pect ex­port growth to be slightly slower than it was last year,» Buce­niece says.

She notes that fol­low­ing the an­nounce­ment from USA about ap­pli­ca­tion of tar­iffs on steel and alu­minum im­ports in the world the tid­ings of pro­tec­tion­ism have once again ap­peared, threat­en­ing global trade vol­umes. «Be­cause Latvia has a small open econ­omy (ex­ports form ap­prox­i­mately 60% of GDP), this risk would neg­a­tively af­fect our ex­porters and eco­nomic growth. It is cur­rently un­clear how other coun­tries will re­spond to the an­nounce­ment from USA and what the ef­fect could be on the world’s and Latvia’s ex­ter­nal trade,» com­ments Buce­niece.

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