Manufacturing helps Estonia’s QI growth

  • 2013-06-12
  • From wire reports

TALLINN - According to the second estimates of Statistics Estonia, in the first quarter of 2013 compared to the same quarter of the previous year, Estonia’s gross domestic product grew by 1.1 percent, reports LETA. Compared to the previous quarter, the seasonally and working-day adjusted GDP declined by 1 percent in the first quarter. GDP at current prices was 4.07 billion euros in the first quarter.

The biggest impact on economic growth in the first quarter was the increase of value-added in trade and energy supply. The growth in trade was supported mainly by the value-added growth in wholesale trade. The increase in electricity production, caused by the growth in energy exports, had an impact on energy supply. Also, the value-added of manufacturing (the biggest activity in the economy) contributed to the increase of GDP. After last year’s decline, the value-added in manufacturing started to rise. The value-added in manufacturing was most affected by the increase of the value-added in manufacturing of computers, electronic, and optical products.

In the fourth quarter of 2012, the biggest contributor to economic growth was the increase of the value-added in transportation and storage. However, in the first quarter of 2013 this activity in real terms was slowing down GDP growth mainly due to the decrease in freight turnover. The value-added in land transport and transport via pipelines decreased significantly.

In the previous year the value-added in construction was the main contributor to economic growth, but in the 1st quarter it decelerated sharply. This was inhibited by the decrease of the value-added of construction of buildings and specialized construction activities. However, the value added in civil engineering increased. The main reason is the decrease of construction volumes after the end of construction for improving the energy efficiency of buildings last year.
In addition, Estonian’s economic growth was also negatively influenced by the decrease of the value-added in professional, scientific and technical activities, mainly due to the decline in the value-added of legal and accounting activities.

Economic growth was also inhibited by a decreased receipt of excise taxes, which are part of net taxes on products.
In the first quarter employment grew faster than GDP at constant prices, while the number of hours worked decreased. Therefore the labor productivity per employee decreased 1 percent compared to the same quarter last year, while hours worked in the total economy increased by 2 percent.

At the same time labor costs for GDP in production increased. In the first quarter unit labor costs increased by 7 percent compared to the same quarter of last year, which indicates that the compensation per employee has grown faster than productivity. Unit labor costs increased for the sixth quarter in succession.

Export growth of goods and services accelerated by 6 percent; import of goods and services by 5 percent in the first quarter. Imports of goods were mainly influenced by the growth of imports of computers, electronic and optical products; machinery and equipment, and transport equipment. Exports of goods were mainly influenced by chemicals and chemical products; computers, electronic and optical products and machinery and equipment. In the first quarter, the share of net exports in the GDP was -0.2 percent, e.g. imports were more than exports in the second quarter in succession.

Growth in domestic demand slowed by 3 percent. Gross fixed capital formation decreased 7 percent in real terms mainly due to business sector investments’ decrease in transport equipment, machinery and equipment. Gross fixed capital formation decreased in real terms last in the third quarter of 2010. The increase of domestic demand was supported by the 4 percent growth of household final consumption expenditures mainly due to the growth of retail sales.
Growth in household consumption was influenced mainly by the increase in food, catering services and operation of personal transport equipment (spare parts and fuel). Domestic demand also grew due to the increase of inventories of goods and materials of the business sector.