Estonian industrial production rose in July at the fastest annual pace in at least a decade as export demand continued to rebound.
Production increased 24.6 percent from a year earlier, the most since records dating back to 2000, compared with a revised 21 percent advance the previous month, the Tallinn-based statistics office said on its website today. Output advanced 5 percent from the previous month on a seasonally adjusted basis.
Industrial output has improved following the biggest plunge in the 27-member European Union last year as demand grows from the Baltic nation's key export partners, Finland and Sweden. An export-led recovery will help Estonia's economy expand 2 percent this year and 3.6 percent in 2011, the Finance Ministry forecast earlier this month.
"Annual export growth rates have been hovering above 20 percent this year and the manufacturing sector that makes up most of Estonia's industrial sector is the first to benefit from this mini-boom," said Hardo Pajula, a Tallinn-based economist with SEB AB, in an e-mailed response to questions. "There are now tentative signs that the benefits of export expansion are slowly trickling down to the rest of the economy."
A possible slowdown in demand from Estonia's main trade partners remains a key risk for the Baltic country, which is due to adopt the euro in January, Finance Minister Jurgen Ligi said last week.
Export sales of manufacturing, led by wireless network gear and wind generators made by local units of Sweden's Ericsson AB and Zurich-based ABB Ltd., rose 38 percent from a year earlier, compared with a 42 percent increase in June. Domestic sales remained unchanged compared with a 6 percent decline the previous month.
Retail sales declined an annual 1 percent in July, the smallest contraction in more than two years, the statistics office said in a separate statement today.
Electronics output soared more than three-fold, with electricity production rising 72 percent and wood processing growing 38 percent, the office said.
Douglas Lytle, Alan Crosby