Page 22 - CE Outlook Regions 2023

In the first three quarters of 2022, the main partner country for Estonia’s
exports of goods was Latvia (16% of total exports), followed by Finland
(16%) and Sweden (9%). The biggest fall was recorded in exports to
the USA and Netherlands.

The top partner countries for Estonia’s imports of goods in the three
quarters of 2022 were Finland (17% of total imports), Latvia (11%) and
Germany (11%). Imports from Finland outweighed imports from all
non-EU countries combined – this was due to increased imports from
Finland and also the dramatic decline in imports from Russia. By
September 1, 2022, the biggest decrease year on year occurred in
imports from Russia (down by €132 million) and Belarus (down by €51
million).

In Estonia, foreign direct investment (FDI) increased by €58.43 million
in September 2022. The FDI prospects for 2023 in the country are
rather bleaker than upbeat due to geopolitical tensions.

2.2.3 Inflation and monetary policy

The Baltic region has seen the highest inflation of all EU economies
throughout 2022, with Lithuania, Estonia and Latvia experiencing a
22.5%, 24.1% and 21.8% respective increase in prices respectively.
The annual HICP inflation was mainly driven by increased prices for
milk and milk products, cheese and eggs, solid fuel, meat and meat
products, heat energy, fuels and lubricants, electricity, bread and
cereals, vegetables, products and materials for maintenance and repair
of the dwelling, and restaurants, cafes and other food services.

In November 2022, inflation stood at 21.7% in Latvia and 21.4% in both
Estonia and Lithuania, according to Eurostat, the EU’s statistical
bureau. Estonia is also expecting annual inflation at around 10% in
2023.

For interest rate rises, all the Baltic states are dependent on action by
the European Central Bank.

22 CE Outlook 2023 www.intellinews.com