New Report Available: Estonia Shipping Report Q4 2013

From: Fast Market Research, Inc.
Published: Mon Oct 07 2013

Estonia Remains Resilient, But Investment Dips

We have reduced our GDP forecast for 2013, largely because of a sharp contraction in fixed investment in the first quarter. Following three years of real GDP growth in Estonia averaging 4.8% per annum, the rate fell to 1.1% in Q113. The main cause seems to have been the conclusion of a programme through which government revenue from carbon emission was funnelled into public investment projects. This led to a sharper than expected fall in overall investment. After a few years of strong investment growth and capacity expansion, it is in any case to be expected that the pace will be slower in the next few quarters.

Against that, private consumption still remains strong and is one of the main drivers of the economy. Although Estonia's main trade partners (Finland, Latvia, Russia and Sweden) have been showing greater vigour than the still-troubled eurozone, we still expect export growth to slow to 4.0% in 2013, down from 5.6% in 2012. On the political front we expect the popularity of the Reform Party, the senior partner in the ruling coalition, to continue ebbing on the back of various corruption scandals. However we think it will maintain a fiscally responsible and market-friendly policy stance until the 2015 general elections, when on current showing, it is likely to lose power. Taking all these factors into account, we have cut our GDP forecast for this year down to +2.1% (from +3.2% previously). However, we do expect the economy to gather pace thereafter, with growth of 3.2% in 2014, followed by 3.0% in 2015.

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Looking at factors specific to the ports and shipping sector, competition from the new Russian Baltic port of Ust-Luga continues to cast a shadow over Estonia's port of Tallinn, even through the worst may now be over. Throughput at the Estonian port fell by 19.2% in 2012 and, we now expect that fall to moderate to a 6.0% contraction this year. The port authorities have claimed that a policy of diversification will eventually begin to pay off. On the other hand, container activity levels are set to remain strong, with double-digit growth.

Headline Industry Data

* Port of Tallinn gross tonnage set to decline by 6.0%, to 27.707mn tonnes in 2013, following a 19.2% fall in 2012.
* Box traffic at Tallinn to grow by 10.9%, to 252,595 twenty-foot equivalent units (TEUs) in 2013, down from 15.2% growth in 2012.
* Estonian foreign trade to gain 5.5% in real terms in 2013, after 7.3% growth in 2012.
* Import growth will lead with 7.0% expansion, ahead of exports, which will be up by 4.0%.

Key Industry Trends

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