Estonian gross domestic product (GDP) grew just 0.5% y/y in Q3, Statistics Estonia announced in a flash estimate released by Statistics Estonia on November 11.

The reading shows the economy expanded at its slowest rate since the second quarter of 2013 and provokes doubt that Estonia will see growth regain momentum following a poor start to the year. 

The expansion was well below the 1.1% seen in Q1, which had already had analysts fretting over their full year forecasts. In adjusted quarterly terms, economic activity decreased 0.5% in July-September. The second quarter had seen GDP grow 0.7%.

Most worryingly, the decline was marked by buckling manufacturing and trade, which both saw growth “close to zero”. The list of postive contributions was, meanwhile, rather disappointing in terms of the real economy. Real estate activity contributed the most to GDP growth in the third quarter, according to Statistics Estonia. Elsewhere, growth was also positively affected by increased receipts of VAT and excise taxes. 

The Estonian government lowered its economic growth forecasts for 2015 and 2016 to 1.7% and 2.6%, respectively, in September. Tallinn had previously said it expected 2% growth this year and 3% next.

The European Commission forecasts Estonian growth at 1.9% in 2015, before accelerating to 2.6%. “Private consumption is projected to decelerate over the forecast horizon [through 2017] as real income growth slows amid rising inflation, but investment is expected to become a stronger growth driver,“ the EU executive noted in early November.