Estonian April industrial production rose at the fastest annual pace in at least a decade as export demand improved, signalling the Baltic economy is on track to recover.
Output increased 18.4 percent from a year earlier, the most since records started in 2000, compared with a revised 11.1 percent jump the previous month, the Tallinn-based statistics office said on its website today. Output rose a seasonally adjusted 2.5 percent from March.
An export-led recovery may help Estonia’s economy expand 1 percent this year and 4 percent in 2011, the central bank said last month. The $17-billion economy will probably grow this quarter from a year earlier and compared with the first three months when the economy shrank a seasonally adjusted 2.3 percent on weak consumer spending, the Finance Ministry said.
“An export-led recovery is materializing, as expected in the Estonian economy,” said Annika Lindblad, an economist with Nordea AB in Helsinki, in an e-mailed response to questions. “The upbeat annual growth was significantly boosted by the low base last year, but all in all the industrial production index continued on its gradual rising trend.”
Manufacturing of electronic and computer equipment jumped 107.7 percent from a year earlier, and wood processing increased 24.4 percent, the office said.
Manufacturing exports, led by wireless network gear and wind generators made by the local units of Sweden’s Ericsson AB and Zurich-based ABB Ltd., jumped an annual 36 percent, compared with a 23 percent increase in March, the statistics office said. Domestic sales fell an annual 12 percent, compared with a 6 percent decline the previous month.
Domestic demand, which powered the $17 billion economy’s boom after European Union entry in 2004, will remain weak due to record unemployment, high private-sector debt and the government’s austerity measures that allowed Estonia to meet euro-adoption terms next January, according to the central bank and the government.
“It is likely that industrial production growth will be double-digit, while retail trade will remain a drag on growth on the back of high unemployment and still restricting policies,” said Jekaterina Rojaka, chief economist at the Vilnius-based DnB Nord Bankas.
Estonia’s retail trade shrank an annual 9 percent in April, the same pace as the previous month, the statistics office said in a separate statement today.