Eamets: Growth in manufacturing output supports economic recovery

TALLINN – According to Bigbank's chief economist Raul Eamets, economic growth was slightly lower than the flash estimate, but the growth in production volumes across various sectors is supporting an economic recovery.

While the flash estimate published a month ago indicated that the Estonian economy had grown by 2.1 percent year-on-year in the second quarter, revised data shows the growth was 1.8 percent. "Positive aspects included the growth in private consumption and the increase in both exports and imports. On the negative side, investments have declined for the second consecutive quarter. In the first quarter, investments fell by 11 percent, and in the second quarter, by six percent. Investment is the key to future economic growth, and if the private sector does not invest, or does not invest in Estonia, then there is nothing to build future growth on," Eamets commented.

According to him, it is undoubtedly positive that the manufacturing industry was the largest contributor to economic growth, with the construction sector also contributing to the expansion. "Unfortunately, trade continued to show negative figures in the second quarter. However, the June data on the growth of retail trade volumes gives cause for cautious optimism," Eamets said.

On Monday, the production volume indices for services for June were also published. Overall, the sales volumes of private sector services at constant prices grew by seven percent. Service volumes have now grown for the second consecutive month.

"This is also supported by the business statistics published today. The growth in companies' sales revenue in the second quarter was 5.4 percent year-on-year, while costs increased by 3.1 percent, meaning that companies' so-called accounting profit, or total profit, also grew. However, it must be kept in mind that this is an aggregated indicator, and differences between sectors are significant," Eamets said.

"The autumn and especially the winter will undoubtedly bring some clarity regarding full-year economic growth and inflation, as it becomes clear what energy prices will actually be. We hope the positive news will continue," Eamets added.