Exports promotion will be tougher in Latvia this year, experts say

Last year Latvia's foreign trade turnover dropped and this year Latvian exporters will have to continue searching for ever new export markets to reduce the pressure caused by the geopolitical situation. Support for export promotion from the European Structural Funds has decreased significantly for this planning period, Latvian Radio reported on February 21.

“In 2023, compared to 2022, foreign trade turnover dropped by 12%,” Kaspars Abiks, head of export promotion division of the Investment and Development Agency of Latvia (LIAA), said. Last year foreign trade turnover experienced a decline after a breakthrough in two years of the pandemic, which was helped by an increase in raw material prices.

“The biggest groups of goods in exports, according to data from 2023, were machinery, electrical equipment, timber products and food products,” Abiks said.

On the other hand, as regards the largest partners of Latvia's foreign trade, the picture in this regard has been relatively constant for several years and most goods and services of Latvian companies are sold in the European Union.

Last year, Lithuania and Estonia also came to the fore in foreign trade, followed by Germany, Sweden, and the United Kingdom. Russia, on the other hand, ranks fifth, while Ukraine ranks 13th. Latvia exports mineral, chemical, and food products to Ukraine the most.

“Against 2022, [export volume to Ukraine] has fallen by 9%, but if we look at a longer time-lapse, then, for example, against 2019, it has grown by 210%,” Abiks noted.

For the next three and a half years, support from the European Structural Funds will also be available for EUR 25 million to promote exports of small and medium-sized enterprises. And for this year, additional support – EUR 6 million – was found in the state budget. Large companies can also claim this state budget money.

Although the representative of the LIAA Abiks pointed out that the available funding of the Structural Funds is only slightly lower than in the previous planning period, the organizations representing the company surveyed by Latvijas Radio emphasized that support for export promotion decreased significantly this year.

The head of the Exporters association “The Red Jackets” Mārtiņš Tiknuss said: “Admittedly, against the previous programming period, which was until the end of 2022, the availability of funding was two-and-a-half times bigger, which means that it is very low and we need to be able to invest and use that funding very wisely.”

When asked how important such aid was for companies to promote exports, Tiknuss replied: “We can see that those companies that use the co-financing and look for export customers in different formats have grown by an average of 30%, their exports are increasing.”

A Member of the Board of the Latvian Chamber of Commerce and industry (LTRK ), Foreign Policy Director Katrīna Zariņa has similar thoughts, saying the funding is insufficient. “And it is also likely to be used quite rapidly, especially considering that merchants are currently diversifying markets in search of a way out to third country markets, which, of course, is also more expensive in terms of costs than continuing to be present only in the European Union market,” Zariņa noted.

LIAA's representative added that Latvia's export priorities will be already existing foreign trade partners. It is also planned to develop cooperation in new markets, including geographically distant ones – from the USA and Canada to South Korea. 

In relation to the export promotion package of Latvian enterprises, 30 trade missions are planned this year, and some of them have already taken place. Latvian companies will also participate in approximately 30 international exhibitions. That's 20 exhibitions fewer than last year, Abiks noted.

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