The bad ones are that the import growth exceeded the growth of export — import increased by 18,5%, and reached 984,05 millions Euro. Thus the foreign trade deficit during the year increased from the considerable amount of 116,6 millions Euro to the sizeable 175,4 millions Euro.
The spurt of the manufacturing sector in the fourth quarter of the last year continuing on this year foreordained the success of export. The most significant input was provided by the export of timber and wood products, metal and metal goods, as well as food products and communications equipment.
In particular the export of the woodworking industry (the largest export sector of Latvian economics) increased by the substantial 16,6% during the year. Every fifth export Euro is a "wooden" Euro. The share of the woodworking industry in the total volume of export amounted to 19,4%. This development is an especially positive one, since after the Brexit referendum the exporters of timber were mentioned as the main potential victims, because they are tightly connected with the UK market. However, for now Brexit does not appear to have such dreadful consequences as predicted earlier.
The growth of commodity prices that began last year increased the cost of Latvian export products. In January of this year after an over two-year break export prices have increased by 0,8% per year. It seems that the decline of export prices remains in the past. Higher prices mean a higher income for Latvian exporters.
The spike in the import costs on the other hand is provided by the chemical industry, food sector, communications equipment and metals and metal goods. In the last few months following an approximately a year long recess the import of machinery and mechanical equipment has increased (+13% in January) along with the import of electrical devices and equipment (+7% in December). It may be a proof of increased investment activity — investors bring to Latvia production machinery, which in the near future will create new jobs and increase tax payments.
Regardless of the sanctions and counter-sanctions Russia still is an important foreign economic partner of Latvia with a 7% share in the total exports of Latvia and a 9,1% share in its imports.
For comparison: the top customers of Latvian products were Lithuania (17,3% of the total exports), Estonia (11,2%) and Germany (8,8%). The largest import partner was Lithuania again (16,9% of the total imports), Germany (10,7%) and Poland (8,7%).
