Estonia’s industrial production remains depressed by COVID-19 in May

Estonia’s industrial production remains depressed by COVID-19 in May
By bne IntelliNews July 5, 2020

Estonian industrial production retreated 17.7% y/y in May, working-day adjusted data from Statistics Estonia showed on June 30. 

May marked the twelfth consecutive month of falling industrial output in the Baltic state. The coronavirus (COVID-19) pandemic has clearly been the chief driver of the decline since March.

The y/y May decline follows a fall of 16.9% y/y the preceding month. Estonia’s industrial sector is expected to perform poorly in the months to come, depressing economic growth in the first quarter and in 2020. 

GDP fell 0.7% y/y and 3.7% q/q in the first quarter in the wake of the pandemic. A contraction of 7.5% could follow in 2020, according to the International Monetary Fund’s World Economic Outlook. The European Commission forecasts a fall of 6.9%. 

Eesti Pank’s forecast is the most pessimistic, expecting a GDP fall of 10% this year. The Tallinn government expects the country’s GDP to contract 8% in 2020 unless its €2.6bn relief programme proves effective. Estonia’s GDP expanded 4.3% last year.

Broken down by the main segments, manufacturing output retreated a working day adjusted 17.3% y/y in May, data showed. That followed a fall of 15% y/y the preceding month.

Output in the mining segment retreated 24.4% y/y in the fifth month, easing fall in comparison to -37.1% y/y in April.

Energy production came down 16.7% y/y in May in comparison to a decline of 35.1% y/y the preceding month.

Within the manufacturing sector, only one out of ten segments managed y/y expansion in May. Production grew 2.1% y/y in the manufacture of chemical products.

The fastest fall took place in the manufacture of motor vehicles, at -45.3% y/y. In the furniture segment, as well as in the manufacture of building materials, output also fell steeply, at 34% y/y and 26% y/y, respectively.

In unadjusted annual terms, industrial production decreased 21.4% in May compared to -16.9% y/y in April. In seasonally adjusted monthly terms, output inched down 0.2%, after retreating 8.4% m/m the preceding month.