Estonia Shipping Report Q2 2015
Port Of Tallinn To Benefit From Trade Diversification
Tonnage and box throughput growth at Estonia's Port of Tallinn will accelerate slightly in 2015 compared to 2014. While 2014 tonnage grew by only 0.3%, this was the first expansion after three consecutive years of falling volumes, reflecting the diversion of Russian transit traffic to the rival port of Ust-Luga. Despite some continuing concerns over trade with Russia, we believe both bulk tonnage and box traffic is now back on a sustainable growth path, reflecting a strong domestic economy and diversification of trade.
The Estonian consumer looks likely to keep the economy motoring ahead for the immediate future. We are predicting stronger GDP growth based on healthy consumer spending - itself a combination of rising nominal wages and lower oil prices in a short-term deflationary context. In our view this rising purchasing power is going to drive the economy forward. GDP growth should accelerate to 2.8% in 2015 and 3.1% in 2016. We expect consumer spending to pull the economy out of its price deflation mode in early 2015.
Government spending will make a relatively subdued contribution to growth, as will gross fixed capital formation. Net exports will be a small drag on GDP. Concerns continue over falls in exports to Russia because of the effect of EU sanctions related to the Ukraine conflict. On the medium term however, we are bullish over the future of exports to markets such as Sweden Finland, the US, and Latvia.
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