Bloomberg News

Estonia’s Industrial Output Suffers Record Monthly Decline

November 01, 2011

(Updates with record monthly decline from first paragraph, analyst comment in fourth.)

Oct. 31 (Bloomberg) -- Estonian industrial production suffered a record monthly decline in September as Europe’s sovereign-debt crisis sapped demand for electronics exports.

Output fell 11 percent from August on a seasonally adjusted basis, the biggest decline since at least 2000, the statistics office in the capital, Tallinn, said today on its website. Production rose 5.5 percent from a year earlier, the slowest pace in 19 months, after increasing a revised 22.6 percent in August.

Confidence among industrial companies fell to its lowest since March 2010 this month, according to a survey by the private Konjunktuuriinstituut research institute. Ericsson AB’s Estonian unit, the country’s biggest exporter, may cut a third of its 1,400 staff after demand declined, newspaper Aeripaeev said Oct. 19, citing unidentified sources. Electronics output shrank 48 percent from August, the statistics office said.

“The fall was definitely steeper than we had expected,” Annika Lindblad, a Helsinki-based analyst with Nordea AB, said in an e-mailed response to questions. “The global problems, which are likely to weigh on Estonian exports as well, are not helping, as industrial production is still largely driven by export demand.”

The Baltic nation’s economy expanded at the fastest pace in the 27-member European Union in the first half, growing 9.5 percent from a year earlier in the first quarter and 8.4 percent in the second, driven by manufacturing and corporate investment.

The escalation of Europe’s sovereign-debt crisis has “significantly” worsened the outlook for the global and Estonian economies, the central bank said last week. The crisis may spread via Nordic parent banks, which control more than 90 percent of Estonia’s banking market, or through lower external demand, the regulator said.

--Editors: Paul Abelsky, Alan Crosby, Andrew Langley

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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