Estonian GDP growth accelerates tiny 0.1pp to 3.7% y/y in Q2

Estonian GDP growth accelerates tiny 0.1pp to 3.7% y/y in Q2
By bne IntelliNews September 2, 2018

Estonian GDP expanded 3.7% y/y in the second quarter, adding 0.1pp to the annual expansion rate recorded in January-March, unadjusted data from Statistics Estonia showed on August 31. 

The reading of GDP sees the Estonian economy moderating for a second consecutive quarter, as domestic demand expanded a modest 4.5% y/y, held back by a 0.8% annual fall in investment. 

“Slower investment activity was present in all asset types across the entire sector of non-financial enterprises,” Statistics Estonia pointed out. 

Household consumption, which grew 4% y/y, helped offset weak investment to an extent.

Meanwhile, export of goods and services grew 5.9% y/y in the second quarter, with export of goods recovering from the downturn in the first quarter, growing 5% in annual terms. 

Export of goods benefitted from increased sales of computers, electronic and optical equipment, motor vehicles, trailers and semi-trailers and wood products, the stats office said. In services, fast-growing export of computer services and services supporting transportation and storage, led expansion. 

With imports of goods and services growing 7% y/y in April-June, the overall share of net exports in GDP was 3.6%.

Sector-wise, growth in construction turned out to be the main contributor to economic growth, with manufacturing contributing strongly as well. Agriculture, forestry and fishing, as well as energy and administrative and support service activities, proved a drag.

Seasonally and working day adjusted, GDP expanded 3.7% y/y and 1.4 q/q in the second quarter. In nominal terms, GDP equalled €6.4bn in current prices in April-June.

Despite the ongoing slowdown, the Estonian economic growth remains above its long-term sustainable rate, Eesti Pank said in a comment to the figures.

"The rapid growth has until now been supported by increased participation in the labour force and growth in employment, but growth in productivity has been slow," said the central bank. It also sounded warning of weak investment growth figures that make improvement in productivity difficult.

Estonia's GDP is predicted to expand 3.5% in 2018, according to the interim summer outlook from the European Commission.