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Friday, October 12, 2007

August Foreign Trade Numbers

I haven't forgotten about Latvia, but with the recent news on inflation, and especially in Estonia and Bulgaria, I have my time cut out writing at the moment.

So really the trade news is certainly not the big news this week, although, of course, it is not without importance, but with people all over the place speculating about the advisability and sustainability of the currency pegs, and the whole situation in countries like Romania and Bulgaria now seeming to be hurtling along almost out of control, I hope you will forgive me if I plead pressure of time.

Well, according to Latvijas Statistika:

Compared to the July 2007, the value of exports in August 2007 increased by 2.3% or 7.4 mln lats, but in comparison with August 2006 it increased by 15.6 % or 45.2 mln lats, reaching 335.7 mln lats, according to Central Statistical Bureau data.

The value of imports in August 2007 was, in turn, 10.6% or 75.8 mln lats lower than in July 2007, but 12.9% or 73.1 mln last higher compared to August 2006, reaching 641.7 mln lats.

The total foreign trade turnover in August 2007 was 13.8% or 118.3 mln lats higher than in the corresponding period of the previous year and its value was as high as 977.4 mln lats.

Basically I'm afraid none of this is very good news. Exports have increased over the months, but these have been more than compensated for by rising imports, until recent months that is, when the rate of increase in imports has slowed, as, of course, the rate of increase in domestic consumption has itself started to slow.

Here's the goods trade deficit to illustrate the point:

The key question to now follow will be the evolution of producer prices in the export sector, since the only way to get out of this mess in the longer term will be to export your way out of it - since all those capital inflows one day or another have to be paid back - and the only way to be able to export is to be competitive.

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