Estonian retail sales grew just 1% y/y in March, according to data released by Statistics Estonia on May 31.
The result shows growth in the sector becoming more volatile. Feeble growth in February was followed by a more dynamic expansion of 5% in March. The minimal growth in April still keeps retail sales on an expansion track they have followed since June 2013. In monthly terms, retail sales contracted 1%.
The expansion of retail sales continues to be fuelled by a tight labour market. If fast growth in industrial output does not falter – with data due on June 1 - that should offer momentum for GDP growth in the coming quarters.
There are already good signs of GDP growth in 2017. The economy expanded 4.4% y/y in the first quarter. Estonia's GDP is predicted to expand 2.2% in 2017, after growing 1.6% in 2016.
The annual growth in retail sales came on the back of a 2% expansion in sales of manufactured goods, which is an deceleration on the 10% expansion in March. Food sales grew 2% on the year, while sales of automotive fuel declined 4% y/y.