TALLINN – The gross domestic product (GDP) of Estonia increased 3.9 percent in 2018 compared to 2017 and the GDP at current prices was 26 billion euros.
For the third consecutive year the economic growth in Estonia was faster than 3 percent. In the fourth quarter of 2018, the Estonian economy increased by 4.2 percent compared to the same quarter of 2017, Statistics Estonia said.
Main contributors to a growth covering the majority of economic activities were construction, manufacturing, professional, scientific and technical activities. A significant contribution to growth came also from transportation and storage, information and communication. All the above-mentioned economic activities showed good results in 2018.
The only significant negative impacts on the economic growth were exerted by agriculture, forestry and fishing. This was largely due to their poor performance in the second half of the year.
The value added in construction increased 18.6 percent in 2018. Last time the growth in construction was that fast was in 2011 when the economy just began to recover from the crisis. Other activities with fast value added growth were professional, scientific and technical activities with 13.3 percent, information and communication with 10.6 percent, transportation and storage with 9.2 percent and mining and quarrying with 8.7 percent. The growth of value added in manufacturing, which contributes the largest share in the GDP, accelerated to 5.3 percent in 2018. The value added in trade increased only 0.9 percent.
Net taxes on products did not increase in 2017, while in 2018 their growth recovered. The net taxes on products at current prices increased by 6.9 percent and by 2.2 percent adjusted for inflation.
In 2018, the exports of goods and services increased 4.3 percent, mainly due to the growth of the services exports. Although the growth was slightly lower than in 2017, the export of services increased by 5.6 percent. This was mostly due to the exports of computer and transportation services.
The export of goods increased 3.6 percent. Main contributors to that growth were the exports of computers, electronic and optical equipment, motor vehicles, trailers and semi-trailers. Imports of goods and services increased 6.1 percent, which was the fastest growth in the last 6 years. This was mostly influenced by the imports of machinery and equipment not elsewhere classified, basic and pharmaceutical products and pharmaceutical preparations.
The imports of services increased 11.6 percent, thanks to the imports of travel and transportation services. Net exports reached 904 million euros in 2018, which is 3.5 percent of the GDP.
Domestic demand also produced the best results in the last 6 years, growing 5.3 percent. This was mostly due to final consumption of households, which increased 4.6 percent in 2018. Last time the household consumption grew that fast was at the peak of the previous boom in 2007.
Investments that declined in the first half of the year started to grow again in the second half. The investments increased 3.3 percent in 2018, which is a very good result compared to previous years. Biggest contributions to growth came from investments into buildings and structures by non-financial enterprises and from investments into dwellings by households. The investments by non-financial enterprises and government sector into transport equipment declined. The final consumption expenditure of the government sector grew by 0.3 percent in 2018.
In 2018, the growth of the GDP once again surpassed the growth of the number of persons employed. As a result, the productivity per person employed grew by 2.6 percent. The number of hours worked decreased in 2018, causing a productivity growth of 5.3 percent per hour worked. As the pressure on wages continued in 2018, the unit labor cost also increased rapidly and at 6 percent surpassed the growth of productivity per hour worked.
In the fourth quarter of 2018, the Estonian economy grew by 4.2 percent compared to the same quarter of 2017. The seasonally and working-day adjusted GDP grew by 2.2 percent in the fourth quarter compared to the previous quarter and by 4.3 percent compared to the fourth quarter of 2017.
The main contributors to the economic growth were construction, transportation and storage and professional, scientific and technical activities. In addition, manufacturing and information and communication also had a significant positive impact. The main hindrances to the economic growth were agriculture, forestry and fishing.
Domestic demand grew 6 percent in the fourth quarter. The growth in investments increased significantly in the last quarter, 17.7 percent compared to the same period of the previous year. Investments increased in all sectors. The main contributors to the growth were the investments in buildings and structures and machinery and equipment by non-financial enterprises. Investments in dwellings by households and investments in machinery and fixed assets for defense purposes by the government sector also increased notably. The final consumption of households grew by 5.1 percent.
The exports of goods and services grew 4.9 percent compared to the same period of the previous year. The main contributors to the growth were the exports of computers, electronic and optical equipment. The same goods as well as metal products and machinery and equipment not elsewhere classified contributed to the growth of the imports of goods and services, which grew 6.1 percent. The share of net exports in the GDP was 3.2 percent.
Productivity per person employed grew 3.3 percent in the fourth quarter, due to an increase of 1 percent in the number of persons employed. Productivity per hour worked grew 6.3 percent because of the decreased number of hours worked. The unit labor cost increased at the same pace.