Estonian GDP grew just 1.1% in 2015, the slowest rate of expansion since the Baltic meltdown in 2009, data from Statistics Estonia showed on March 10.
The stuttering expansion was largely the result of second half results, following a fairly promising start to the year. It extends a record of sub 2% growth to three years, despite the ongoing recovery from the fall of close to 15% six years previously.
Suggesting a link to the deterioration in Russia, the sluggish growth in 2015 was driven by a slowdown in transportation and storage. Declines in construction and manufacturing also played a part, with the latter suffering from weak external demand, Statistics Estonia notes. That in turn contributed to a 1.1% drop in exports across the year. Imports declined 1.8%.
Domestic demand, earmarked as a major factor for economic growth over the medium term, was disappointing, falling 0.7% overall. That said, household consumption grew 3.3% on the back of spending on food, recreation and transport. Finally, investments increased 4.5% in 2015.
In the fourth quarter, the economy expanded 0.7% y/y - the same as recorded in the third. The year started off with 1.1% growth in the first quarter, and followed up with 2% in April-June.
Domestic demand grew 0.2% in the fourth quarter in annual terms, including a 3.2% expansion in household consumption. Investment decreased 0.4%, Statistics Estonia noted.
The Estonian government forecasts growth will push to 2.6% in 2016, while the European Commission puts it at 2.1%. “Private consumption is projected to decelerate over the forecast horizon [through 2017] as real income growth slows down. However, investment is expected to become a stronger growth driver,“ the EU executive noted in early February.