Page 25 - CE Outlook Regions 2024

2.2.4 Industrial production
Industrial production was pointing down in the Baltics throughout the entire second half of 2023 and will likely remain downward in the first half of 2024.
Industrial production in Lithuania increased 0.6% year-on-year in October 2023, recovering from a downwardly revised 2.4% fall in the previous month. It was the first growth after the three consecutive months of decline in industrial activity. On a seasonally adjusted monthly basis, industrial production tumbled 0.9% in October, following a downwardly revised 0.3% increase in the previous month.
In Latvia, industrial production output in January-October decreased 5.3% from the same period last year, according to calendar-adjusted data at constant prices, the Central Statistical Bureau said.
Especially worrying was the situation of Estonia. While for some sectors of the Estonian economy the decline seems to be over, in industry the downturn seems to be continuing at the same pace and this trend may not change even in the more distant future, SEB analyst Mihkel Nestor said in mid-December.
Estonia's industrial production has been in decline since April of last year, and with no rapid recovery expected, the crisis in manufacturing will be longer than the one we saw in 2008-2010, Lenno Uuskula, chief economist at Luminor, said in mid-December.
Despite the fact that industrial production has been declining since the beginning of the summer of 2022, its downward trend does not even show any signs of slowing down. In October of 2023, manufacturing companies produced 12% fewer goods than last year, and production volumes also decreased by 1.6 percent compared to September. As a result, the production volumes of manufacturing have fallen to the level where they were last in 2018.
The much talked-about reason why the industry's indicators are so dismal is the extremely weak demand in the Nordic construction and real estate market. In recent months, however, the outlook for exporters has also worsened elsewhere.
Nor do forward-looking indicators offer any high hopes for a reversal of the situation for the better for Estonia in 2024. The level of new orders for industrial enterprises is currently equal to the low point hit during the COVID-19 crisis. The economic situation of Estonia's main trading partners shows no significant signs of improvement in 2024 either. The utilisation of the industry's production capacity is now back at the level
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