Economic Growth Slower as Expected, but Vital Signs Good
The Bank of Estonia ( Photo: Postimees/Scanpix )
Estonia's GDP experienced a quarterly contraction for the first time since 2010, but the Bank of Estonia said the drop did not affect all sectors of the economy.
Estonia's GDP shed 0.8 percent in the fourth quarter of 2011 compared to the third quarter. It was the first time the economy had shrunk from one quarter to the next since early 2010.
Year on year, the economy grew 4 percent in the fourth quarter of 2011.
The central bank's economist Kaspar Oja said the slowdown was in line with the Bank of Estonia forecast. He said the latest data on industrial output and confidence indicate the decline has not deepened.
The GDP decrease was primarily due to lower industrial output in early fall. "This was a dropoff of production in the energy sector due primarily to the warm autumn and lower export of computers, electronics and optical devices," said Oja.
Part of it could be attributed to sentiment surrounding the debt crisis. Besides the blip in early fall, said Oja, the debt crisis had not affected the non-financial services part of the Estonian economy.
Internal demand is healthy, construction was active in autumn due to the warmer weather and smaller heating bills left households with more money to spend.
The bank is calling for 1.9 percent growth in 2012.