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 Estonian wood exporters worried about Sweden's weak krona
[April 17, 2024]

Estonian exporters are concerned about the weak Swedish krona and selling their products on the market. Additionally, the Swedish construction and real estate sector is still in crisis, and there is no hope of improvement this year.

The strengthening of the Swedish krona against the euro has been expected for some time, but so far in vain, Tuesday's "Aktuaalne kaamera" reported.

SEB Economic Analyst Mihkel Nestor said: "The Swedish krona tends to strengthen against the euro all the time, but in practice, it has not worked out well so far. It depends not so much on what is happening in Sweden itself, but on what is happening in the major world markets in terms of currency and bond yields. Historically, the Swedish krona has been well correlated with the US 10-year bond yield."

The weak krona burdens Estonian exporters focusing on the Swedish market.

Martti Kork, CEO of wood processing company Barrus in Võru, south Estonia, said: "Today, the construction market is down by tens of percent, the Swedish krona is weak, which is hampering our exports to Sweden and the euro area in general. On the other hand, their own timber industry ĘC the cheap Swedish krona supports their exports and Barrus feels this today in its other markets, where Sweden is still a strong timber country and producers there can offer similar products at more competitive prices than Barrus can today."

Nestor said Sweden's weak construction market is worse than the weak exchange rate. No improvement is expected until 2025 or 2026.

"If we look at the previous half-year, at the end of 2023, new building permits were issued at around a third of what they would have been in normal times. With a very high fall in demand, I am afraid that the Swedish krona is not the main concern. But exports to Sweden are wider. There are also sectors where the change in demand has not been that big and they are, of course, bothered by the Swedish krona exchange rate," he said.

Estonia's exporters still expect the situation to improve and are ready to return to the market there as soon as possible.

"Sweden is certainly not a lost country. Geographically it is a very close market for us, we know the market, and we have been operating there for decades. We're certainly not throwing in the towel, we're going to keep on delivering, we're going to keep on hoping for a steady flow of our raw materials and for an improvement in competitiveness at some point, there's no choice," Kork said.

Source:  news.err.ee