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.
Author: Carl Kelly, Economist