Complicated times in the Estonian industrial sector
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Chief Economist, Bigbank
The Estonian industry is going through hard times because it is necessary to deal with the consequences of major crises: all inputs to production, from raw materials to wages, have become more expensive.
Export-oriented sectors in particular have been hit, as the economic situation of our trading partners is not at its best. The predictions for 2024 are not very promising either.
Processing industry forms 14% of our GDP, and by employment rate it is also the largest branch of economy, giving work to 120,000 people.
If we look back to the period of 2019–2022, we see that wood processing has grown the most, and the share of the production of metal products and the share of computer and electronics manufacturing in the whole processing industry have also increased. Employment has also grown in these sectors. General salary growth has brought about the increase of labour costs in the whole economy. Sewing and textile sector has been hit the hardest, 5400 jobs have been lost there during the period under observation.
The need to prioritise processing industry also at national level is highlighted as a policy recommendation. The sectoral associations have proposed creating the position of a secretary general in the ministry responsible for economic affairs. It is also necessary to establish “green corridors” for applications relating to large investments and areas of strategic importance for Estonia.