Estonia: Economy slows in the fourth quarter on inventories
March 9, 2012
In the fourth quarter, GDP grew 4.5% over the same period the year before which, although revised upwards from February's flash estimate of 4.0%, was well below the 8.5% rise seen in the third quarter. Compared to the previous quarter, the economy declined a seasonally and calendar-day adjusted 0.2%, contrasting Q3's 0.9% increase. The Estonian economy expanded 7.6% in the full year 2011, more than tripling the 2.3% rise observed in 2010. The fourth quarter slowdown was mainly due to the decrease in inventories which, according to Statistics Estonia (SE), shaved 2.0 percentage points off economic growth in the fourth quarter. Fixed investment, on the other hand, expanded a whopping 34.2% in the fourth quarter (Q3: +34.4% year-on-year) on the back of business-sector investments in capital goods. Private consumption grew 5.0% in the fourth quarter (Q3: +5.1% yoy), while government consumption decelerated from a 5.7% expansion in the third quarter to a 0.1% increase in the fourth. Exports of goods and services slowed from a 24.4% increase in the third quarter to a 9.7% expansion in the fourth, while imports decelerated from a 30.7% rise in the third quarter to a 12.9% increase in the fourth. As a result, the external sector's net contribution to economic growth improved slightly from minus 2.0 percentage points in the third quarter to minus 1.7 percentage points in the fourth. The Central Bank sees the economy growing 1.9% this year and 3.6% in 2013.