The Long-term Impact on Estonia of the War between Russia and Ukraine

Report: Completely ending import from Russia and Belarus would have the greatest impact on the logistics, metal, and wood industries

Completely ending import of Russian and Belarus goods would have the greatest impact on the logistics, metal, and wood industries, where the replacement goods from other countries are more than 25% more expensive, shows the Foresight Centre brief report “Impact of ending import from Russia and Belarus on economic sectors”. Reshaping supply chains would increase costs for businesses and require keeping larger stocks to ground the risks.


“Replacing import goods from Russia and Belarus is made more difficult by the fact that there is no surplus supply in many economic sectors and the only way to ensure getting the goods would be to outbid the other market participants,” said Foresight Centre expert Uku Varblane. “Completely ending the import of the necessary production inputs would have broader impact on the sectors linked to warehousing or freight transport, as well as on metal production, and wood and chemical industries.”

Replacing the import goods from Russia and Belarus with goods from other countries would increase the costs in freight transport and warehousing by 31%, in wood processing by 28%, in metal production by 57%, in manufacture of metal products by 63%, and in chemical industry by 23%.

While completely ending import from Russia and Belarus would entail a EUR 860 million additional cost to Estonian businesses in 2021 prices in total, the largest proportional impact on the prices of import inputs would be felt in metal production industry, where these would increase on average by 34%, or EUR 29.5 million. “The price pressure is also significant in the ancillary activities to warehousing and freight transport where the prices of import inputs would rise the most, i.e. by EUR 457 million. This is followed by EUR 63 million in wood industry and EUR 24.5 million in chemical industry,” Uku Varblane elaborated.

The study analysed 540 categories of goods based on the actual transaction information from Statistics Estonia. The analysis includes only the direct impact of replacing imports, i.e. the goods that the businesses import themselves. “Indirect impact is also crucial, such as the price pressure caused by the increase in the price of energy carriers, which reaches the businesses through domestic service providers,” Varblane explained. “The reverberations of the import restrictions from Russia and Belarus also reach Estonian businesses via global value chains, i.e. when intermediary products are imported from countries who previously used raw materials from Russia and Belarus.”

In 2021, EUR 20 billion worth of goods were imported into Estonia, including 2.1 billion worth from Russia (10.5% of total import) and 0.6 billion worth from Belarus (3.1% of total import). The key imports from these countries are fuels and natural resources (60%), wood and wooden products (13.8%), metal products (9.2%), and products of chemical industry (7.2%).

Read the brief report (in Estonian)

On Wednesday, 29 June at 11 a.m., the Foresight Centre will publish its special report “Long term impact of the Russo-Ukrainian war on Estonia”.

In 2022, the Foresight Centre launched a special research into the long term impact of the Russo-Ukrainian war, which analyses the possible long-term impact of the influx of refugees on the population, employment, and the revenue and expenditure of the state. The research also explores the direct economic impact of the war on the businesses that are active in Estonia, with a view of replacing the production inputs that are imported from Russia and Belarus.

The Foresight Centre is an advisory board at the Chancellery of the Riigikogu that analyses long-term developments in society and economy. The Centre conducts research projects to analyse the long-term developments in the Estonian society, and to identify new trends and development directions.

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