Estonia GDP


Estonia: Q1 GDP contracts for first time in four years despite upward revision

June 9, 2014

GDP fell 1.4% in Q1 over the same period of last year according to the revised data Statistics Estonia (SE) published on 9 June. The reading was revised up from the 1.9% contraction reported in the flash estimate, but still represents a deterioration compared to the 0.3% increase recorded in Q4.

The deceleration in the first quarter was driven by a negative contribution from the external sector, whereas domestic demand strengthened as a whole. Growth in private consumption moderated from 3.0% in Q4 to 2.5% in Q1. Government consumption increased 1.1% in Q1, matching the result from Q4. Moreover, gross fixed investment rebounded to a 3.5% expansion in Q1 (Q4: -1.2% year-on-year).

On the external side, exports of goods and services rebounded from a 0.8% contraction in Q4 to a 1.4% increase in Q1. However, imports marked an even greater turnaround, increasing 3.5% over the same period of the previous year, which contrasted the 2.0% decrease recorded in Q4. As a result, the external sector’s net contribution to overall economic growth swung from plus 1.2 percentage points in Q4 to minus 2.0 percentage points in Q1.

GDP contracted 1.2% quarter-on-quarter on seasonally- and working-day adjusted terms, which followed the 0.1% drop tallied in the fourth quarter.

The Central Bank expects GDP growth to reach 2.6% in 2014 and 3.9% in 2015. FocusEconomics Consensus Forecast participants see the economy growing 1.6% in 2014, which is down 0.4 percentage points from last month’s estimate. In 2015, economic growth is expected to accelerate to 2.8%.

Author:, Economist

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Estonia GDP Chart

Estonia GDP Q1 2014 0

Note: Year-on-year changes of GDP in %.
Source: Statistics Estonia and FocusEconomics Consensus Forecast.

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