GDP growth smaller than expected
GDP growth slowed more than expected, from 1.9% in the second quarter to 0.5% in the third quarter, year on year. Quarter-on-quarter change in GDP volumes was negative: -0.5%. During the first 9 months of the year, GDP in Estonia grew by 1.3%.
Economic growth slowed as the growth of the value added in manufacturing and trade diminished. The biggest positive contribution to GDP growth came from the real estate sector. Manufacturing has been hit by low export demand. Widening economic crisis in Russia, ongoing economic struggles in Finland and lower growth in Lithuania mean that demand in our main export markets is weaker this year.
Economic growth is expected to accelerate next year. The economic sentiment indicators are pointing upwards. Demand in our main export markets is expected to strengthen. Higher export volumes would also lift investment volumes. The growth of private consumption is expected to decelerate as the growth of real net wages is forecasted to slow. As the contribution of consumption will decrease and the contribution of exports will increase, economic growth will become more balanced.