Estonian GDP expanded 1.7% on the year in the first quarter, marking a healthy pick up from the sluggish growth tempo seen in the second half of 2015, Statistics Estonia announced on June 9.
The announcement confirms the preliminary estimate issued on May 12. In quarterly terms GDP grew 1%. Seasonally and working day adjusted, the economy expanded 1.8% on the year but remained flat in quarterly terms.
“Estonia’s economy was positively influenced by domestic demand ... [which] increased 3% at real prices, mainly due to household final consumption expenditures,” Statistics Estonia notes.
Growth in the first quarter was driven by “continued robust growth of domestic trade," fuelled by growing real wages, low fuel prices and low interest rates, Swedbank noted in May. Raised excise taxes on alcohol and fuels also had a positive influence.
On the negative side, growth was hindered by a drop in exports and falling production of electricity. However, the former is expected to pick during the year.
Swedbank expects the Estonian economy to grow 2% this year, with improving investment and exports the primary drivers. The rapid growth of private consumption is likely to slow a little the analysts forecast.
Pushing to 2% would mark a strong improvement on the feeble performance last year. Estonian GDP grew just 1.1% in 2015, the slowest rate of expansion since the Baltic meltdown in 2009.