Latvia’s Top 10 Exports

Latvia’s Top 10 Exports

by Flagpictures.org

A Northern European nation sharing land borders with Estonia, Lithuania, Russia and Belarus, the Republic of Latvia shipped US$14.6 billion worth of goods around the globe in 2018. That dollar amount reflects a 7.6% increase since 2014 and a 12.6% uptick from 2017 to 2018.

Based on estimates from the Central Intelligence Agency’s World Factbook, Latvia’s exported goods plus services represent 60.6% of total Latvian economic output or Gross Domestic Product. Please note that the overall value of exported goods and services includes a sizable share of re-exports. The analysis below focuses on exported products only.

The latest data shows that nearly three-quarters (73.7%) of products exported from Latvia were bought by importers in: Lithuania (16% of the global total), Estonia (11.5%), Russia (9.1%), Sweden (7.3%), Germany (7%), United Kingdom (5.7%), Denmark (4.5%), Poland (4.1%), United States (3.8%), Finland (2.4%) and the Netherlands (2.3%).

From a continental perspective, 85.6% of Latvian exports by value were delivered to fellow European countries while 7.7% were sold to Asian importers. Latvia shipped another 4% to customers in North America. Smaller percentages went to Africa (1.4%), Latin America (0.4%) excluding Mexico but including the Caribbean, and Oceania (0.3%) led by Australia.

Given Latvia’s population of 1.9 million people, its total $14.6 billion in 2018 exports translates to roughly $7,600 for every resident in the north European nation.

Latvia’s unemployment rate was 6.9% as of January 2019, down from 8.1% in December 2017, according to Trading Economics.

Latvia’s Top 10 Exports

Top 10

The following export product groups represent the highest dollar value in Latvian global shipments during 2018 at the 2-digit Harmonized Tariff System (HTS) code level. Also shown is the percentage share each export category represents in terms of overall exports from Latvia.

  1. Wood: US$2.7 billion (18.2% of total exports)
  2. Electrical machinery, equipment: $1.5 billion (10.2%)
  3. Machinery including computers: $1.2 billion (8%)
  4. Vehicles: $835.1 million (5.7%)
  5. Beverages, spirits, vinegar: $743.3 million (5.1%)
  6. Iron, steel: $599.2 million (4.1%)
  7. Mineral fuels including oil: $576.8 million (3.9%)
  8. Pharmaceuticals: $519.9 million (3.6%)
  9. Articles of iron or steel: $487.3 million (3.3%)
  10. Furniture, bedding, lighting, signs, prefab buildings: $422.7 million (2.9%)

Latvia’s top 10 exports accounted for roughly two-thirds (65%) of the overall value of its global shipments.

Machinery including computers was the fastest-growing top export category, up 40.9% from 2017 to 2018 led by improved revenues from turbo-jets.

In second place for improving export sales was iron and steel which gained 24.1%.

Wood posted the third-fastest gain in value thanks to its 23.9% improvement, ahead of the 18.4% increase for Latvia’s exported vehicles.

Drilling down to the more detailed 4-digit HTS codes, Latvia’s most valuable export products are sawn or chipped lumber pieces (5.6% of total). Trailing that were mobile phones (5%), alcohol including spirits and liqueurs (3.8%), medication mixes in dosage (3.2%), fuel wood including wood chips and sawdust (2.7%), turbo-jets (2.4%), rough wood (2.3%), wheat (2.1%) then Latvia’s exported cars (also 2.1%).

Advantages

The following types of Latvian product shipments represent positive net exports or a trade balance surplus. Investopedia defines net exports as the value of a country’s total exports minus the value of its total imports.

In a nutshell, net exports reflect the amount by which foreign spending on a home country’s goods or services exceeds or lags the home country’s spending on foreign goods or services.

  1. Wood: US$2 billion (Up by 20% since 2017)
  2. Cereals: $171.1 million (Down by -46%)
  3. Furniture, bedding, lighting, signs, prefab buildings: $169.1 million (Up by 20.6%)
  4. Books, newspapers, pictures: $114.2 million (Up by 2.9%)
  5. Dairy, eggs, honey: $113.5 million (Down by -17%)
  6. Meat/seafood preparations: $54.5 million (Up by 25.1%)
  7. Beverages, spirits, vinegar: $42.3 million (Down by -35.7%)
  8. Live animals: $42.1 million (Up by 10.2%)
  9. Articles of iron or steel: $41.5 million (Down by -13.4%)
  10. Glass: $37.3 million (Down by -14.1%)

Latvia has highly positive net exports in the international trade of lumber. In turn, these cashflows indicate Latvia’s strong competitive advantages under the wood product category.

Opportunities

Latvia incurred an overall trade deficit of -$3.7 billion during 2018, expanding by 29% from the -$2.9 billion in red ink one year earlier.

Below are exports from Latvia that result in negative net exports or product trade balance deficits. These negative net exports reveal product categories where foreign spending on home country Latvia’s goods trail Latvian importer spending on foreign products.

  1. Mineral fuels including oil: -US$1.1 billion (Up by 22.2% since 2017)
  2. Machinery including computers: -$956 million (Up by 27.8%)
  3. Vehicles: -$714.1 million (Up by 5.9%)
  4. Aircraft, spacecraft: -$507.1 million (Up by 3330.1%)
  5. Electrical machinery, equipment: -$378.2 million (Up by 18.6%)
  6. Plastics, plastic articles: -$351.7 million (Up by 6%)
  7. Iron, steel: -$191.1 million (Up by 107.2%)
  8. Pharmaceuticals: -$190.4 million (Up by 3.7%)
  9. Paper, paper items: -$189.2 million (Up by 6.2%)
  10. Rubber, rubber articles: -$170.5 million (Up by 16.3%)

Latvia has highly negative net exports and therefore deep international trade deficits for mineral fuels-related products particularly refined petroleum oils, petroleum gases then petroleum coke and other petroleum residues.

These cashflow deficiencies clearly indicate Latvia’s competitive disadvantages in the international energy market, but also represent key opportunities for Latvia to improve its position in the global economy through focused innovations.

Companies

Latvian Export Companies

Given that Latvia is a small emerging economy, it should come as no surprise that not one Latvian corporation appears on the Forbes Global 2000 list.

Wikipedia does outline some Latvian export companies. Selected examples are shown below:

  • Estonia Piano Factory (pianos)
  • Liviko (vodka, other alcoholic beverages)
  • Narva Oil Plant (shale oil)
  • Rakvere Lihakombinaat (meat products)
  • Rexer Ltd (automobiles)
  • Saku Brewery (beer, cider, soft drinks, water)
  • Tartu Mill AS (grains)
  • Tondi Elektroonika (hearing aids)


 

Latvia’s capital city is Riga.

Research Sources:
Forbes Global 2000 rankings, The World’s Biggest Public Companies. Accessed on March 18, 2019

International Monetary Fund, World Economic Outlook Database (GDP based on Purchasing Power Parity). Accessed on March 18, 2019

Trade Map, International Trade Centre. Accessed on March 18, 2019

Investopedia, Net Exports Definition. Accessed on March 18, 2019

Wikipedia, List of Companies of Latvia. Accessed on March 18, 2019