BNS - According to Swedbank's macroanalyst Maris Lauri the rapidly increasing export and industrial output refers to the fact that in Q2 Estonia's economy would grow by two percent.
Bigger growth figures are expected in the second part of the year when positive influences of the introduction of the euro will become apparent, Swedbank said.
The credibility index of the economy has been rising for twelve months running, whereas the improvement in Q2 was considerable, the bank added.
Lauri said that consumer confidence had risen above the long-term average. But consumers' spendings still remains very modest and no growth is to be expected yet.
The industrial production volume has been rapidly increasing since March: the monthly growth of the manufacturing industry in industrial output with the seasonal factors removed has been 2.5 percent on the average. In April-May the industrial output increased by 17.7 percent compared with the same period last year, whereas in the manufacturing industry it was 18.7 percent and in energy 37.2 percent. In mining the production volume fell 7 percent. The biggest growth was in the production of capital goods - 42 percent. The production of interim products increased by 15.4 percent and of durable consumer goods 11.3 percent. The production of final goods, which also include food items, only increased by 0.6 percent.
According to Lauri all this refers to the fact that while external demand is increasing and entrepreneurs manage to increase export, domestic demand is weak. So the production of foodstuffs has contracted by 2.2 percent compared with last year, while there has been a rise in the dairy and fishery industry.
Also the production of clothing and computers is falling. Elsewhere production volumes are growing. The growth in export is due to extensive changes made in companies: due to cutting of expenditures production has become more effective and opportunities have been sought to sell their products on other, traditionally better growing markets.
Although retail sales volumes are falling on year, this has been due to the very low basis of comparison above all with the previous year. The analysis also refers to the fact that the sales volumes of retail sale have stabilized and there has been a very modest rise by about 0.5 percent in the past couple of months.
As a positive development it must certainly be pointed out that the number of job-seekers has been consistently falling during Q2. No doubt the contraction has also been because many people have given up going to the unemployment insurance fund and employment due to seasonal factors has also improved.
Revenues of the state budget are in a considerably better condition compared with last year. Tax revenues have grown by about 2 percent, mainly due to the growth in reserves, above all thanks to growth in reserves due to the rise in excise in January.
In Q2 the tax revenue of the state budget was 2 to 3 percent smaller than last year. But according to Lauri it is important that the inflow of tax revenue has increased by more than 9 percent and the state has received 11 percent more fuel excise than last year. Naturally, the rise in the tax revenue plays a role here but on the basis of the fall that has taken place in the economy a more modest level of tax revenue could be expected.
Good inflow of non-tax revenue and contraction of expenditures also has a role in the improvement of the condition of the state budget. The condition of the budget, however, is far from being good, and it would have to be necessary to wait for the return of the earlier years' surplus for several more years, because the state will have to start fulfilling promises given last year.
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