Estonian GDP declined 0.7% y/y in the first quarter after expanding 3.9% y/y in the fourth quarter, unadjusted data from Statistics Estonia showed on May 29.
The fall is less an effect of the coronavirus (COVID-19) pandemic than the weakness of Estonia’s energy and manufacturing sectors, the statistical office said. The impact of the coronavirus was “not yet considerable. However, the virus seems to have negatively affected trade, transport and accommodation and food service activities,” it added.
Investment fell 6.9% y/y in the first quarter after growing 5.9% y/y in Q4. The decline was an effect of very high growth in January-March of 2019 and the long-term negative trend in manufacturing.
Growth in household consumption almost disappeared in the first quarter, inching up 0.3% y/y after an expansion of 1.7% y/y in October-December.
Overall, Estonia’s domestic demand growth slid 3.4% y/y in Q1.
Foreign trade also experienced decline in Q1. Exports declined 2.6% y/y while imports retreated 5.2% in annual terms.
GDP is expected to contract 6.9% in 2020, according to the European Commission’s May forecast.
Seasonally and working-day adjusted, GDP fell 0.8% y/y in the first quarter while also contracting 3.7% on the quarter.
In nominal terms, GDP equalled €6.5bn in January-March (€7.4bn in Q4).
In terms of sectoral contribution in the fourth quarter, the information and communication and construction sectors proved the main growth drivers. Growth was also supported by agriculture, fishing and forestry, and wholesale and retail trade. The energy sector dragged down on the results due to warm winter. The manufacturing, real estate, and accommodation sectors also held back economic expansion.