TALLINN - The Finance Ministry reported on Feb. 13 that Estonia's economy grew 11.5 percent, making it one of the two fastest growing economies in the EU along with Latvia. The result is based on preliminary data but falls in line with analysts' expectations.
On Feb. 12 the statistics bureau announced that GDP in the fourth quarter grew 11.2 percent compared with the same quarter in 2005.
Kristjan Pungas, an analysts with the Finance Ministry, told The Associated Press that booming consumption, a boistrous real estate market and cheap loans were the main catalysts behind the stellar growth. He warned, however, that there were signs of overheating.
As if Latvia, labor costs are rising faster than gains in productivity, one of the classic indicators that an economy is growing too fast. Also, Estonia's current account deficit is rising rapidly as consumers soak up more imported goods.
According to Statistics Estonia, "Economic growth was most influenced by the growth of the manufacturing and wholesale and retail trade activities. Big impact on the economic growth was exerted also by transport, storage and communication and financial intermediation economic activities."
Inflation also continues to plague Estonia, where in 2006 the increase in the CPI was 5.1 percent.
