Estonian GDP expanded 1.1% on the year in the third quarter, adding 0.3pp to the tempo seen in April-June, Statistics Estonia announced in a flash estimate on November 11.

The growth in GDP remains disppointing following a sluggish first quarter of the year, and very poor second. The economy managed expansion of just 1.1% in the first nine months of the year. However, data also suggests Estonia is set to see a gradual acceleration in activity.

The industrial sector grew 4.2% in the third quarter after a year of decline, with manufacturing and energy production contributing well. The transport, ITC and retail sectors also made headway.

Exports contributed positively with growth of 2.3% y/y, with sales abroad of electronic products and electrical equipment the main drivers. A detailed breakdown of growth components will be published on December 9. Seasonally and working-day adjusted, economic growth gained 0.2% in quarterly terms.

Estonia's GDP is predicted to expand by just 1.1% throughout the full year according to a November forecast from the European Commission. For 2017, economic expansion is likely to accelerate to 2.3%, as “external demand, especially from Finland and the other two Baltic states, gathers pace and international oil prices rise.”

Analysts at Swedbank appear more optimistic, however. Major export partners are likely to boost demand next year, they suggest, while investment should get a boost from additional EU fund absorption. "Producer and export prices are increasing and this is expected to improve enterprises turnover, including export turnover," they add.