Estonian GDP expanded 4.4% y/y in the first quarter, Statistics Estonia announced on May 31.

The gain is 1.7pp quicker than the growth recorded in the final quarter of last year, strengthening the outlook for clear pick up this year after a mediocre 2016. The positive outlook is strengthened by growth in investment, which proved a drag on the economy last year.

In the first quarter investment boomed 16.5% on the year. The dynamic confirms expectations for a pick up in investment activity owing to accelerating absorption of EU funds.

Meanwhile growth in household consumption, which was in the driving seat in 2016, faltered to an expansion of just 0.6% y/y. 

Real exports of goods and services increased for the fifth quarter in a row, Statistics Estonia noted, driven by sales of transport equipment, mineral products and wood products. Imports also grew in the first quarter. Overall, net export was positive in January-March, coming in at 2.3% of GDP.

In terms of sectoral contribution, manufacturing, wholesale and retail trade, as well as construction were the top sectors. Agriculture, forestry and fishing in particular, contributed negatively.

In seasonally and working day adjusted terms in the first quarter, GDP expanded 4% y/y and 0.8% q/q. GDP equalled €5.2bn in January-March.

Estonia's GDP is predicted to expand 2.3% in 2017 and 2.8% in 2018, according to the European Commission.