Estonia’s economy powers ahead

  • 2011-06-15
  • From wire reports

TALLINN - Estonia’s GDP, according to the second estimates from Statistics Estonia, increased by 8.5 percent in the 1st quarter of 2011 compared to the same quarter in the previous year, reports news agency LETA. GDP growth has gradually accelerated since the 2nd quarter of last year.

Compared to the previous quarter, the seasonally and working-day adjusted GDP grew by 2.4 percent.
In the 1st quarter, the GDP at current prices was 3.7 billion euros. The fast growth of the value-added of manufacturing (29 percent) contributed the most to the GDP. Contributions to GDP from manufacturing were 3.9 percentage points. The manufacture of radio, TV and communication equipment had the biggest impact on the growth of the value-added of this economic activity. Manufacture of wood, chemical and metal products had a bigger influence on the value-added.

The value-added of manufacturing grew mainly with the support of vigorous exports. Transport, storage and communication, other business activities and construction had a bigger contribution to the GDP growth. In the 1st quarter, the value-added of construction turned to growth after a two-and-a-half-year decrease. Construction of buildings and structures grew rapidly and the value-added of construction increased 23 percent compared to the same quarter of the previous year. The fast growth of the value-added of construction proceeded from the low comparison basis of the previous year.

GDP growth was substantially influenced by the increase in the receipts of the value-added tax and excise taxes.
The value-added of forestry, fishing, electricity, gas and water supply and financial intermediation decreased. Deceleration in growth of exports of electricity contributed to the decrease in the value-added of electricity, gas and water supply. The value-added of financial intermediation fell due to the decrease in the insurance output and increase in insurance claims. In the 1st quarter the share of economic activities with decreased value-added was 12 percent (28 percent in the 4th quarter).

In the 1st quarter the number of persons employed, and hours worked, increased. This resulted in the deceleration of labor productivity of the total economy per hour worked to 0.7 percent compared to the same quarter of the previous year. Labor productivity per hour worked decelerated for the third quarter in succession. Productivity has been calculated by the resident production units (domestic concept) and by seasonally and working-day adjusted figures. The decrease of labor costs for the production of the GDP has decelerated. In the 1st quarter unit labor costs decreased by a percentage compared to the same quarter of the previous year.

The growth of domestic demand accelerated to 13 percent, primarily due to the increase of inventories. In addition, the domestic demand was contributed to by the increase in gross fixed capital formation and household final consumption expenditures (12 percent and 5 percent, respectively). The increase of the gross fixed capital formation was influenced mostly by the investments in transport equipment by the business sector. The increase of the household final consumption expenditures was influenced mainly by the increase of the housing and transport expenditures.

In the 1st quarter, both exports and imports of goods and services increased by 39 percent in real terms. Exports of goods grew by 53 percent and import of goods by 45 percent. The exports and imports of radio, TV and communication equipment and apparatus had the biggest influence on the growth of exports and imports. Although exports of goods and services are continually bigger than imports in Estonia, the gap diminished substantially in the 1st quarter. The share of net exports to the GDP was 1.3 percent. In the 4th quarter of the previous year the respective figure was 7.4 percent.