In November of the last year the cost of exported goods grew by 3.4%, if compared to November 2015.
To some extent this is a result of predatory pricing by the Latvian exporters. The volumes of sale of their products have grown since the export prices of the manufacturers were lower than a year earlier. The export growth underwent under the guise ‘Come on! Come all!’
When you look at the situation by industries, then the biggest contribution to the growth of export cost is attributed to woodworkers, whose key selling market remains Great Britain. No matter how the experts - analytics frightened by the Brexit voting, but because of the beginning of the process of exit of Great Britain from the EU the Latvian sales have not shrunk.
The key export industry of Latvia for 11 months of 2016 sold the forest produce worth 1.928 billion euro, which is 3.5% more than for the same period of 2015. The most of the forest produce in January – November was exported to ‘floating away from the EU Great Britain (19.8%), as well as to Germany (10%) and Sweden (9.9%). As compared with the corresponding period of 2015 export to Great Britain showed a growth by 7.1% and made up 381.306 million euro.
Growth in the total export cost contributed to increase in foreign sales of vehicles (+ 27.4 per cent), furniture (+ 46.2 per cent) and pharmaceutical products (+ 24.3 per cent).
In its turn, the total export cost was weighted down most of all by fall in sales of grain — compared with November 2015 they crashed by 54.8 per cent. In 2016 the bulk yield of grain under the influence of weather was lower both in terms of quantity and of quality. Because of worse quality the 2016 crop sales price was lower, which also affected the cost of export grain in November.
As in previous months the export cost of a number of categories of products of re-export – oil products, electrical equipment and mechanisms continued falling down.
If we look at the previous year in general, then over 11 months the export cost shrank by 1.1 per cent if compared with the same period of 2015. The fall was predestined by shrinking of export cost for such categories of re-export products as oil products, electrical equipment and mechanisms.
Although, in general, in 2016 the export cost appears lower, 2017 is going to be better. This year the foregoing should be facilitated by the raise in commodity prices and improvement of the external demand in the world.
However, the sentiments of exporters might improve only after the influence of Brexit and positions of newly elected President of the USA on foreign policy and trade issues get clarity. Moreover, the government of Latvia must remain consistent regarding taxation matters.
Alas, the announced by President Raimonds Vejonis next taxation revolution does not contribute to the stability of the Latvian business environment. All we know now the next taxation changes will be declared in spring this year. Most likely they would touch the value added tax and property tax.