Estonia’s trade deficit increased to €1.6bn in 2014, €126mn more than in 2013, according to data released by Estonian Statistics on January 10.

Following the introduction of Russian sanctions on European Union agricultural produce, Estonia’s exports dwindled by 2% y/y in 2014. Imports dropped 1%. 

Top export destinations were Sweden, Finland, and Latvia. Russia dropped from third to fourth place following a 15% y/y fall in exports.

However, there is hope that with the EU absorbing 72% of Estonian exports (the single currency area is also responsible for 83% of imports) the effect of the Russian embargo, as well as the economic slowdown and crash of the ruble, might not be as negative as previously feared.

According to the European Commission's latest outlook, Estonia's trade balance “should remain positive throughout the forecast period [2015/2016], supported by the recovery in the Eurozone demand from mid-2015.”

Eesti Pank, meanwhile, is pushing Estonian business to seek expansion into new markets. “Diversifying markets would also help to improve the outlook for economic growth, as Estonia’s current trading partners are growing more slowly than the rest of the world,” the central bank noted in December.