TALLINN - Estonia pulled out of recession last quarter for the first time in two years, exiting the European Union’s third-deepest recession, as exports rose and companies stocked up on alcohol, tobacco and fuel before tax increases take effect, reports Bloomberg. GDP rose a seasonally adjusted 2.5 percent, compared with a preliminary estimate of 2.6 percent and a revised decline of 0.5 percent in the third quarter, said the Tallinn-based statistics office. Output shrank a revised 9.5 percent from a year earlier, compared with a preliminary estimate of a 9.4 percent slump.
Improved global demand for Estonian exports spurred growth as domestic demand remained weak because of growing unemployment. Exports of wireless network gear and generators for wind turbines manufactured by local units of Ericsson and ABB Ltd. rose 3 percent from the previous quarter, the statistics office said.
The minority Cabinet of Prime Minister Andrus Ansip last year cut the fiscal deficit by 9 percent of GDP to meet budget terms for euro entry in 2011, saying this would stabilize the economy more than any additional fiscal stimulus measures.
The economy shrank an annual 14.1 percent last year, the statistics office said. Neighboring Latvia’s GDP plunged 17.7 percent and Lithuania’s economy, the biggest of the three Baltic countries, contracted 15 percent. Finance Minister Jurgen Ligi said on Feb. 25 that the economy would grow at a slower pace in the first quarter than in the previous three months. A full-year estimate for a 0.1 percent contraction will probably be upgraded this month, he said.
Fourth-quarter figures got a one-time boost from stock-building of alcohol, tobacco and fuel by retailers and wholesalers ahead of tax increases in January, part of the government’s efforts to reduce the deficit. Household spending dropped 17 percent, compared with 20 percent in the third quarter, as the government and companies cut jobs and wages. Exports of goods and services fell 8 percent from a year ago, adjusted for inflation, compared with a 9.6 percent slump in the third quarter.