Estonian GDP expanded 1.7% on the year in the first quarter, marking a pick up from the sluggish growth tempo seen in the previous quarter and across 2015, data from Statistics Estonia showed on May 12.
In quarterly terms, GDP grew 1%, the data showed. Seasonally and working day adjusted, the economy expanded 1.8% on the year but remained flat in quarterly terms.
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 notes. Raised excise taxes on alcohol and fuels also had a positive influence, as receipts of excise taxes on these goods boomed 205% y/y.
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.