Estonia's economic linkages with Russia
• Russia’s share in Estonia’s foreign trade is below 10%
• Russia’s share in foreign investments remains small
• The crisis in Ukraine will affect trade and investment flows
Russia’s share in Estonia’s foreign trade is below 10%
Russia’s share in Estonia’s foreign trade is rather small, only 9% in 2013. However, Russia’s market is more relevant for certain sectors, like food industry and agriculture, as well as chemical and textile industries. As a source of raw materials, Russia is important for timber, furniture, chemical, and metal industries. Russia’s market is also significant for Estonia’s exports of transport and travel services.
Russia’s share in foreign investments remains small
The stock of Estonia’s investment in Russia and Russia’s investment in Estonia remains modest. At the end of 2013, the stock of Estonia’s investments in Russia amounted to 4% in Estonia’s total investment abroad, and the stock of Russia’s investment in Estonia was also 4% of all foreign investment in Estonia.
The crisis in Ukraine will affect trade and investment flows
Exports to Russia are affected not only by the decreasing purchasing power of Russians, but also by possible trade barriers. Investment flows will be smaller because investing in Eastern Europe is considered more risky and will be less profitable when economic growth in the region will be slower. If the conflict in Ukraine does not escalate and sanctions remain targeted with a modest impact, the Baltic economies are still expected to grow, albeit slower than anticipated before. Should the conflict escalate and broader trade sanctions be introduced, Estonia and the other Baltic economies will probably be hit harder – in which case a recession should not be ruled out.
For more information about this report, please contact Ms. Liis Elmik, +372 888 7206, email@example.com