The bottom of the recession in the manufacturing industry in Estonia has not yet been reached, says Bigbank chief economist Raul Eamets, analyzing the latest data from the Statistics Department. :format(webp)/nginx/o/2024/02/08/15875057t1ha169.jpg)
Raul Eamets. Photo: Tairo Lutter
The bottom of the recession in the manufacturing industry in Estonia has not yet been reached, says Bigbank chief economist Raul Eamets, analyzing the latest data from the Statistics Department.
“Manufacturing output fell three percent year-on-year in June. It's worth remembering that at this time last year, production was also in the red. Sales were virtually unchanged from last year, up just 0.4 percent. This is also a sign of decline, because if sales have not changed, this means that volumes have decreased by the same amount as the price increase,” Eamets explained in comments to BNS.
“If we compare June with May of this year, we will see a drop in volumes by the same amount, or -2.9 percent. This is a little worrying because since January, at least on a monthly basis, industrial indicators have been gradually improving, meaning each month the decline has been smaller and smaller. So we cannot say that the bottom has already been reached in the manufacturing industry,” Eamets noted.
“In fact, this has been repeatedly confirmed by the business community itself, which cools the optimistic assessments of analysts about the imminent improvement of the situation. So far there has been no recovery. On the other hand, in the longer term, in so-called normal times, when the economy is growing, there is usually a slight drop in June compared to May. One of the reasons for this is probably the summer and the start of the associated holiday periods,” Eamets suggested.
According to him, there are exceptions. “The food industry was in a good plus, but this is also due to seasonal factors – after all, now is one of the most pleasant times for canning garden produce. The energy sector also shows good results, but this is also due to the season, since in summer we usually have more sun than in winter,” Eamets noted.
According to Eamets, the moment of truth will come in September, when it becomes clear whether the ongoing decline in statistics is seasonal or whether we have overestimated the economy's ability to recover, and economic difficulties will continue in the fall.
