According to the flash estimates of Statistics Estonia, the gross domestic product of Estonia contracted 1.9 percent year-on-year in the first quarter of 2014
However, Annika Laarmaa, the lead statistician and methodologist for the department of economic and environmental statistics at Statistics Estonia, said it is too soon to read too much into the drop.
"These are flash statistics, and we won't put out the final numbers until June 9," Laarmaa told ERR News. "It's quite hard to tell what is going on from it yet."
Marje Josing, the head of the Institute of Economic Research, told ERR radio: "Bad news, but not very unexpected on the backdrop of the current economic climate, if you look at the political events and moods [in Ukraine and Russia]."
The previous time that the GDP fell was in the 1st quarter of 2010.
Compared to the 4th quarter of 2013, the seasonally and working-day adjusted GDP decreased by 1.2%.
Laarmaa said there are normal seasonal adjustments to the flash statistics that are released, but the unusually warm winter Estonian experienced this year fell outside that normal adjustment. Energy was one of the areas that slowed down GDP growth the most, with consumers using less energy, and energy producers importing electricity to replace their own production.
"It's probably cheaper for them to do it that way," Laarmaa said. "It was quite a warm winter, and that naturally causes a drop in the production of heating and need for electrictiy."
Real estate and transport were other areas that saw a year-on-year decrease. The main reason for the deceleration in real estate was an accelerated rise in prices.
The growth of manufacturing, which is the main contributor to economic growth in Estonia, slowed down mainly due to a decrease in the manufacture of electronic and chemical products. However, the economy was bouyed by the manufacture of wood.
The drop follows a 0.3 percent gain in the 2013 fourth quarter statistics year-on-year. The economy grew 1.3 percent in the same first-quarter statistic last year.