Estonian GDP growth accelerated to 3.7% in the 2nd quarter
Real GDP growth in
Estonia accelerated to 3.7% yoy in the second quarter of 2018. The growth was
stronger than in the first quarter (3.3%). In the first half, GDP growth was
3.5% in real terms. The acceleration of the growth was expected. However,
nominal GDP growth in the second quarter was much stronger (8%).
As a part of annual
regular revision, Statistics Estonia revised the national accounts data for
2014–2017 and the first quarter of 2018. According to the revised data, real
GDP growth in the first quarter of this year was 0.3 percentage points lower –
3.3%. As a result of the revision, GDP for 2015 was revised up by 0.2
percentage points to 1.9% and the GDP for 2016 – by 1.4 percentage points to
Economic growth was broad-based
In the second quarter
of 2018, the vast majority of activities contributed to the economic growth. As
in the previous five quarters, main contributor to GDP growth was construction
sector. This year the growth of construction sector was mainly supported by the
construction of buildings. The highest contribution to GDP growth came also
from manufacturing; professional and technical activities; transport and ICT
sectors. The main activities that had a negative impact on the growth were
agriculture, forestry and fishing; energy and administrative activities and
support service activities.
The growth of manufacturing sector is supported by robust foreign demand
The growth of
manufacturing sector has accelerated already for four quarters in a row. It has
been supported by robust foreign demand – the growth of export of goods was 5%
yoy. We expect that the growth of foreign demand eases somewhat this year,
which could decelerate the growth of Estonian export volumes. Estonian
manufacturing companies export growth expectations have also worsened.
Investments decreased by 0.8% in the second quarter
declined in the first and second quarter of the year. While investments of
business sector have declined, government and households investments have increased.
This was partly due to the base effect as in the first half of the last year
higher investments were made in transportation sector. In the second half of
this year the impact of the base effect is expected to fade and business sector
investments should improve. At the same time, the share of investments in GDP
is at the lowest level since the restoration of independence, which will also
mean lower potential GDP growth.
Household consumption was strong in the first half of the year
Although retail trade
volume growth has decelerated, the growth of household consumption in the
second quarter was strong – 4% yoy. This is partly due to the decline in the
share of goods in private consumption expenditures in last years. At the same
time, price growth together with higher savings is limiting household consumption. In the next years we expect that the private consumption should
grow by about 3%.
Economic growth in Estonia is expected to slow this year, but the economy in still well balanced and resilient
According to Swedbank
latest forecast, economic growth in Estonia is expected to decelerate to 3.5% this
year and 3.2% next year. Although, the growth will slow, economy will be well
balanced and resilient.
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