Finance Ministry: Foreign demand expected to become main driver of growth
Domestic consumption growth, which has been the main driver of economic growth in Estonia, is expected to decelerate in the second half of the year, while foreign demand is expected to increase.
"This year we are expecting private consumption growth to slow down as a result of an increase in consumer prices in the second half of the year as well as a smaller decline in labor taxes than last year," Erki Lõhmuste, deputy head of the Finance Ministry's fiscal policy department, said.
“The decline in the export of goods continued in the first quarter as a result of weak external demand, which was intensified by the autumn in the exports of oil products due to low oil prices as well as a high reference base in the export of communications equipment. At the same time import volumes started to increase after the past years' decline,” Lõhmuste commented on foreign trade.
The Ministry of Finance expects Estonia's economy to recover in the next few quarters as a result of foreign demand picking up. In its spring forecast, the ministry stated that it expected Estonia's 2016 economic growth to accelerate to 2%.
Estonian GDP increased by 1.7% in the first quarter of 2016 compared to the first quarter of 2015, flash estimates published by Statistics Estonia on Thursday indicate.
In the first quarter of 2016, the seasonally and working-day adjusted GDP did not change compared to the previous quarter, and grew by 1.8% compared to the first quarter of 2015.