Data released by the Central Statistical Bureau on foreign trade in Latvia show that the export value of goods in September this year dropped for the first time in the last six months. Although the export value of goods in September was generally high and exceeded one billion euros, which is higher than in other separate months of this year, exports of goods were 1% lower than in September last year.
The fall of FM's small total exports was explained by the previously forecasted reduction in exports of cereals and rapeseeds, due to poor grain crops this autumn, as well as a decrease in re-exports for certain electrical equipment and mechanical appliances. "Excluding the drop in exports of these goods, the total exports in September would be 3.9% higher than in September of the previous year," added the Ministry.
In September, the largest negative impact on the change in the export value of goods was observed for the agricultural and food products group, in particular due to the drop in exports of cereals and rapeseeds. Traditionally, the largest amount of cereals and rape exports can be seen in the autumn months, but in September this year the export value of these goods was 3.8% and 76.8% respectively, as compared to the corresponding month of the previous year.
"The unpredictably dry weather in Latvia this summer has had a negative impact on the volume of harvested harvest, which also has an impact on export data, and it is likely that the export value of these goods will be lower than in the other autumn months. The total drop in agricultural and food exports in September this year was 11.5 %, "said FM.
The fall in exports in September was somewhat offset by an increase of 17.7% in exports of wood and articles of wood, influenced by an increase in exports of logs to Estonia and the United Kingdom, and an increase in exports of unprocessed timber to Sweden.
"Despite the fact that exports of wood for wood products reached the highest export value since 1995, this commodity export group was the main driving force of exports in the first nine months of 2018 and provided the largest contribution to export growth. The total exports of goods in the first in nine months it increased by 8.3% compared to the corresponding period of the previous year, and slightly more than a third is a gain in wood export growth, "the ministry informed.
Among other commodity groups affected by export changes in September, FM noted an increase of 8.7% in exports of chemical products in connection with the growth of exports of pharmaceuticals to Lithuania. The increase in exports of metals by 7.9% was driven by an increase in exports of iron and steel to Turkey, as well as an increase in exports of iron and non-alloy steel and rods to the European Union (EU) countries.
"In assessing Latvia's export development outlook in the medium term, the negative risks have intensified since the beginning of this year, and the growth of exports may be limited by the uncertainty surrounding the global environment in connection with the rise of protectionist world trade. The mood of EU entrepreneurs remains very high, however, the dynamics of recent months has been downward and economic The value of the sentiment index in October this year reached its lowest level since mid-last year. In addition, the Latvian industry's assessment of product outlook in the fourth quarter of this year has slightly deteriorated compared to previous quarters, "the ministry acknowledged.
Similarly, FM acknowledged that the factors determining the fall in exports in September were not related to the fall in external demand. However, the most recent International Monetary Fund (IMF) World Economic Report, which was renewed this October, saw a 0.6 percentage point reduction in world trade volumes for the current year to 4.2%, compared to July's projections for this year. This is mainly explained by the rise in protectionist world trade.
"The IMF has already reduced global trade growth already in the previous economic forecasts that were reinstated in July this year, which leads to the conclusion that since the middle of this year, the risks to the world's external trade have only intensified. Consequently, the growth rate of exports of Latvian goods in the coming months will decrease and will be lower than the average growth rate in the first nine months of this year, or 8.3%, "said FM.