Estonian economy - A step back before the one forward

Article published on June 10, 2008
Article published on June 10, 2008
Estonian economy is stuck. Someone keep saying that we are living the deepest crisis of our history, someonelse calls for slowing down our panic and the Estonian Minister of Finance try rassuring investors ( do we still attract them?) and consumers saying that there is no concrete risk of devaluation of the Estonian Kroon.
For preparing our readers to a special interview we realized with Tonis Oja - online tomorrow - Analyst Editor of Aripaev, we decided to re-post here some of the most relevant articles recently  published on the most controversial topic of the last months.

See you tomorrow.

Estonian economic growth revised down to 0.1 pct in the Q1

According to the preliminary calculations of Statistics Estonia, the gross domestic product (GDP) increased by 0.1 pct in the 1st quarter of 2008 compared to the same period in the previous year.

Compared to the 4th quarter of 2007, the seasonally and working-day adjusted GDP growth at constant prices decreased by 0.5 pct.

In the 1st quarter of 2008 compared to the previous year, the GDP growth decelerated steeply. According to the Eurostat preliminary data, Estonia’s GDP growth in the 1st quarter was the lowest among the EU Member States. Deceleration of the GDP growth was influenced by the decrease in domestic demand and exports.

Compared to the same quarter of the previous year, the domestic demand decreased by 0.7 pct at constant prices primarily due to the decrease in private consumption (-0.4 pct). Private consumption decreased mainly due to the decrease in expenditures on transport, clothing and footwear, alcoholic beverages and tobacco. Capital investments grew by 5.2 pct, influenced mainly by the investments in construction by the general government sector.

The decrease in exports and imports at constant prices since the second half of the previous year deepened in the 1st quarter this year even more. Exports decreased by 5.4 pct and imports by 3.8 pct at constant prices compared to the 1st quarter of the previous year. Exports of goods decreased by 0.6 pct primarily due to the decrease in exports of refined petroleum products. Exports of services decreased even by 18.6 pct primarily due to the decrease in exports of services for sea and railway cargo transport. The deficit of net exports in GDP has increased since the second half of the previous year and amounted to -9.7 pct in GDP in the 1st quarter this year.

On the supply side the steep deceleration of the GDP growth was influenced mainly by the decrease in the value added in wholesale and retail trade, transport and storage and real estate activities and by the deceleration of the growth of the value added in manufacturing, construction and financial intermediation activities. The value added growth in financial intermediation activities decelerated especially steeply.

Receipts of taxes less subsidies on products decelerated compared to the same quarter of the previous year mainly due to the significant under-receipts of value added tax and excise taxes.