Baltics
December 2008
CONSTRUCTION - Construction in Latvia decreased in the Q3/2008 y-o-y by 7.3% (at constant prices). The volume of new construction shrank by 7.7%, whereas repairs and reconstruction declined by 6.9%.
CONSTRUCTION - AS Merko Ehitus, the largest publicly traded Baltic builder, predicts the construction market in Estonia, Latvia and Lithuania to continue shrinking in 2009 and 2010 as the economies falter and banks cut back lending.
INFLATION - Latvian inflation rate fell to 13.8%, down from 14.9% in August, which is the lowest level in 11 months. Latvian inflation continues to be the highest among the EU27. In Lithuania inflation has slowed down to 10.5% and in Estonia to 9.8%. The Estonian inflation is forecasted to be at 7.5% in 2009 and 5.8% in 2010.
RESCUE PACKAGE - Latvian government is rewriting its 2009 budget to include 1,4 bn EUR cuts (17% of the original budget) in order to secure a 5 bn $ loan from the IMF.
HOUSEHOLD GOODS - The Finnish-owned Koduextra household goods retail chain has acquired the rivalling chain SuperBox, the last Estonian- owned company left on the household retail market, for an undisclosed sum. The merger adds 15 SuperBox stores to Koduextra's 9, giving the company a clear leadership ahead of its competitors Jysk, Tiimari and Novalux, who had a total of 37 stores in 2007.
AVIATION - Without a capital injection from the owners, Estonian Air might go bankrupt and is certainly unable to buy new planes, which are essential for it to change its strategy to become a regional airline.
PRODUCTION - PKC Group, the Finnish producer of wiring harnesses for heavy vehicles, cuts its production capacity by 40% due to declining delivery volumes and falling prices. PKC has two plants in Estonia with a total of 1 000 employees. PKC also has two plants in Russia and one in Finland.
IT - SAP Baltics' expansion has reached Estonia where the company opened up an office. The company aims to raise its market share to 30% from the current 5%.
AUTOMOTIVES - A-Katsastus has acquired two inspection stations in Estonia as a first move in the process of becoming the market leader. In Latvia A-Katsastus is already the second largest player in the market.
VISA FREEDOM - Lithuanian-Belarusian border residents may travel without visas already in 2008. The residents living near the Lithuanian-Belarusian state border will be granted a possibility to enter the both countries without visas.
October 2008
FOREIGN INVESTMENTS - Foreign investments to Estonia increased by 351 M EUR or 1% to 28 Bn EUR in the second quarter. Most of the investments came from Sweden (38%) and Finland (21%).
COMPETITIVENESS - Estonia fell 5 places, to 32nd, in the World Economic Forum's Global Competitiveness Index, ranking mainly due to worsening macro economic outlook. Now Estonia is ranked just above Czech Republic (33nd) and clearly higher than Lithuania (44th), Slovakia (46th), Russia (51st) and Latvia (54th).
UNEMPLOYMENT - In August unemployment in Estonia was 4%, which is lower than the 6.9% average for EU-27. The other Eastern European EU member states with below average unemployment are Slovenia (4.2%), Czech Republic (4.3%) and Lithuania (5.1%).
REAL ESTATE - Despite some growth in the number of transactions, apartment prices continued to fall in Estonia. In September y-o-y the decrease in prices in Tallinn was 19% reaching even 25% in the very city centre. Prices of houses built on the fields on Tallinn outskirts are most vulnerable and the prices have fallen up to half in one year.
REAL ESTATE - According to a fresh report the Riga apartment prices have dropped 39% over the past 1,5 years. In 08/08 the average apartment price was 1050 euro/m2.
ENERGY - Eesti Energia, the Estonian energy company, announced that it intends to capture a third of the energy market in the Baltics and become the energy market leader in the area by 2015. This year the company has increased its corporate customer base in Latvia from 8 to 40 companies.
RETAIL - All major shopping centers in Tallinn have added or are about to add thousands of square meters of floor space. For example, Rocca al Mare, one of Tallinn's largest shopping centers, is opening a new 21,000 m2 wing.
RETAIL - In August 2008 the Estonian retail sales decreased 6% y-o-y; in grocery stores the drop was 3%.
AVIATION - The Latvian national airline airBaltic will leave the Lithuanian market. The decision was made after Lithuanian court decided to arrest properties of airBaltic and the Riga International Airport, worth about 55 M EUR.
RETAIL - Retail shopping mall operator Linstow Center Management is planning a 400 M EUR investment into building a new retail park near Riga. According to plans, the construction of the 750,000 m˛ retail park should commence in 2009.
RETAIL - Lithuania's largest retailer chain Maxima LT has tightened their belt. The company has put investments, worth approximately 38 M EUR, on hold. Layoffs are also considered.
August 2008
ECONOMY - In the 2Q/2008 Estonian economy grew -1.4%.
TRANSPORT - Port of Tallinn is being developed to a major regional container centre with the objective to reach 3-4 mln TEUs a year by 2010.
IT - The combined revenues Baltic IT companies grew 34.2% in 2007. IT sector growth has been above 20% for the last 4 years.
ECONOMY - The Bank of Lithuania changed forecasts for 2009:
GDP growth 4.2% up from 3.9%
Average annual inflation up to 11.8% from 9.8%
Unemployment rate to 6% from 5.5%
Growth of average wages to slow down to 5.7% from 19%
Current account deficit go down from 13.5% to 10.8%
INDUSTRY - Over first half-year 2008, the total industrial production of Lithuania grew 7.5%, compared to the same period last year.
AGRICULTURE - Achema, Lithuania's nitrogen fertilizer and chemicals producer controlled by Achema Group, has invested 38.7 M EUR into a new methanol shop.
TRANSPORT - Riga airport is going to expand to become four times bigger and will be able to serve 12 million passengers per year making it the biggest in the region.
REAL ESTATE - In Riga the real estate prices have fallen 20-30% due to a smaller amount of loans.
FORESTRY - Bergvik Skog, a Swedish forestry company, is taking over two Latvian companies in the largest Latvian transaction involving forest properties.
May 2008 Baltics
ECONOMIC DEVELOPMENT - In past ten years Estonians' purchase volume has grown 250% being the fastest consumption growth in Europe. Purchase growth has increased Estonian economic growth, raised wages and brought hundreds of thousands of people out of poverty.
RETAIL - SOK, the Finnish retailer, is planning to open grocery supermarkets also in smaller Estonian towns. The expansion will most likely begin from Harjumaa region.
CONSTRUCTION - The Estonian construction market grew only 7% in 2007 compared to the rapid growth of 30% in 2006. In 2008 unemployment in the construction sector has soared to 6 000 people.
CONSTRUCTION - Cramo, the Finnish rental services provider, acquired Tapeks Noma, a Latvian construction machinery and equipment rental services company with 16 outlets.
FOREIGN DIRECT INVESTMENT - According to Statistics Lithuania foreign direct investment in Lithuania grew by approximately 20% compared to the previous year, amounting to roughly EUR10 billions. Investors from Poland contributed the most (18%), followed by Denmark (13%) and Sweden (12%). Most of the investments went to manufacturing (36%) and financial intermediation (17%).
RETAIL - Stockmann, the retail chain, has signed a preliminary lease agreement for its first department store in Lithuania. The new 13 000 sqm department store will be located in Vilnius.
ENERGY - The Lithuanian government is considering the possibility of constructing a EUR 500M LNGterminal in the early 2010's due to the imminent closure of the nuclear power plant in Ignalina.
BEVERAGES - British Brewery Scottish and Newcastle accepted Carlsberg's and Heineken's joint acquisition offer making Carlsberg the largest shareholder of Saku Őlletehas with 75%. The current market value of Saku Őlletehas is 96 M EUR.
INTERNET USAGE - According to the European Commission Estonia, Latvia and Lithuania ranked 10th, 12th and 17th in percentage of total population using the Internet among the EU27 member states.
March 2008
ECONOMIC DEVELOPMENT - Hot domestic demand is beginning to cool in all Baltic states and credit growth is slowing to some extent, says the SEB bank. All three economies are decelerating and will grow below potential level next year. Inflation remains high and the risk of a hard landing persists.
The Estonian economy is growing at the slowest pace in eight years and although Latvian economic development remained at a high level, the current figures indicate that the peak of record fast growth has been passed.
GDP growth Q4/07 CPI growth 12/07
Estonia 4.5% 9.6%
Latvia 9.6% 14.1%
Lithuania 8.7% 8.1%
TAX SYSTEM - A survey by KPMG ranks Estonia's tax system among the top five in Europe. 400 businessmen ranked Estonia above average in all categories, especially in stability and low tax rates, both of which got an 80% approval rating.
BANKING - Nordea Bank Estonia, reported a 44% increase in its profits for 2007, thus amassing a profit of EUR 20 mln. Asset volume grew by 41% y-o-y and loan portfolio by 59% y-o-y.
FOREIGN DIRECT INVESTMENTS - FDI into Latvian companies increased by 23% y-o-y in 2007. The largest foreign investments were made in the financial and real estate branches. The most significant foreign investments were made towards Hansabanka, worth EUR 100 mln.
TELECOM - In its long battle over control of Lattelekom, TeliaSonera has announced that it has made a non-bonding bid to the Latvian government for the shares in fixed line operator Lattelecom and its mobile unit LMT. Currently TeliaSonera owns 49% of Lattelecom. The value of the bid is estimated EUR 0.7 bln.
TRANSPORT - LLC Joint Venture Baltic Oil Terminal plans to build a 7.5 mln tonnes refinery and a 10 mln tonnes oil terminal in Latvia. The refinery is planned to be built in Daugavpils, and the oil will be delivered form Kazakhstan or Russia by pipeline. The project is valued at EUR 2.5 bln.
ENERGY - Lietuvos Energija and Svenska Kraftnat finished a feasibility study concerning a power bridge between Lithuania and Sweden. The study concluded that an interconnection between the power grids would be both feasible and profitable. The project could be implemented by 2015, the cost of the project being between EUR 516-637 mln depending on the cable.
BANKING - Lithuanian banks reported record-high profits in 2007. According to preliminary data, net profits of Lithuanian banks increased by 73% y-o-y, The profitability of the Lithuanian banking system has been growing for six successive years.
January 2008
ECONOMIC DEVELOPMENT - The central bank of Estonia has denied rumors of a devaluation of the kroon against the euro. The official statement came on 26 November after a massive sale of kroons among the Russian-speaking population (Russians form around a quarter of Estonia's population). The panic followed a report on a website of a radical Russian-speaking youth movement, Night Vigil, which claimed that the Estonian government had decided to change the exchange rate peg from EEK 15.65 to EEK 24.64 to the euro.
ECONOMIC DEVELOPMENT - Lithuania's statistical office confirmed the preliminary estimate of real GDP growth of 10.8% in the third quarter of the current year. GDP was driven by non-manufacturing sectors: agriculture and construction experienced the highest growth rates. As regards to expenditure, a modest slowdown in consumption growth and in the growth of gross fixed capital formation was observed. Salaries are still growing very strongly. Average monthly earnings grew by 17.9% in Q3 2007, reaching LTL 1,950 (EUR 564). The interbank rate continued to rise sharply: the 3-month Vilibor hit 6.74%, the highest level since 2001. The Vilibor rate is currently over 3% higher than one year ago (3.64%).
CAR SALES - The growth of new car sales in Estonia has slowed down due to economic deceleration. In the first quarter of 2007, the sales of new cars grew by 50%, but in September-November the sales grew only by 10%. However, 2007 annual growth will be 20% which is record high.
LOGISTICS - Estonia's largest ferry group Tallink borrows EUR 144 mln to finance the construction of one of its cruise ferries, Cruise 5. The ferry is planned to be delivered in spring 2009 by the Finnish shipyard Aker Yards. The total cost for the ferry will be EUR 180 mln.
CONSTRUCTION - In Lithuania, a group of Danish and local investors has announced intentions to build a mega business centre in Vilnius. The plan is to build a 12-storey World Trade Centre by 2010. The cost of the project is estimated to be EUR 580 mln
HOUSING LOANS - In Latvia during the first ten months of 2007, long-term housing loans increased by 40% compared to the end of 2006. According to the Latvian Central Bank, Latvian banks had issued EUR 6.5 bln in housing loans by October 2007. Especially housing loans for longer than five year terms increased in their number.
CONSTRUCTION - There are plans to build a multifunctional complex in Riga, Latvia. The total investment is estimated to be around EUR 100 mln. The new complex is planned to serve as an alternative for Riga railway station and to facilitate passenger transportation and to decrease traffic flows in Riga.
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