Estonian economy robust

  • 2005-04-06
  • Baltic News Service
TALLINN - Analysts said that the preliminary economic growth figures released last week by the Statistical Office rest on a broad base, as domestic consumption and export alike saw solid growth.

Preliminary GDP growth for 2004 was revised from 6.1 percent to 6.2 percent since economic expansion in the fourth quarter was higher than previously estimated. Domestic consumption increased 6.6 percent and exports were up 16.3 percent.

Hansabank analyst Maris Lauri commented, "Since domestic supply has been consistently underestimating the dynamics of domestic consumption, imports grew 13.8 percent, while domestic supply was up 7.7 percent."

Investments recorded the biggest growth in domestic demand, with the volume of inventories and semi-finished buildings having grown significantly. "In the first quarter growth in inventories amounted to 6.8 percent of GDP, and the April buying frenzy [ahead of accession to the EU] meant an extra increase in inventories in the second quarter," Lauri said.

The rate of growth of investments in fixed assets slowed dramatically after a record 20.2 percent jump in the second quarter, amounting to just 6 percent in the final quarter of the year, she said.

"The first quarter of this year should nevertheless offer a little better results because of the low reference base. Among the favorable factors are the EU resources that are now beginning to reach the Estonian economy," Lauri added.

She said the biggest obstacle to investment growth were rising prices, as in construction alone the price rise was 5.3 percent last year.