Estonia’s economy grows 1.1% to €20.5bn in 2015
Estonia's gross domestic product increased by 1.1% in 2015 and was €20.5bn at current prices, Statistics Estonia reported on Thursday.
2015 was characterized by a slow but steady growth of the Estonian economy. In the first quarter, GDP grew by 1.1% compared to previous year, while in the final quarter the rate of growth was 0.7%.
The decrease in value added in transportation and storage influenced the Estonian economy the most, along with a decline in construction and manufacturing activities. Construction volumes in the domestic market decreased. The country's biggest economic sector, manufacturing, shrank mainly as a result of weak external demand.
Agriculture, forestry, and fishing all contributed to GDP growth. Beyond them, professional, scientific, and technical activities as well as trade contributed the most. Trade increased mainly on the back of stable growth in retail sales.
Despite the increase in the first quarter of the year, in 2015 real exports of goods and services shrank by 1.1% compared to 2014. Imports of goods and services decreased by 1.8%. Lower volumes of imported and exported electronic products had the biggest negative impact on Estonian foreign trade.
Domestic demand was weak also, decreasing by 0.7% mainly due to smaller inventories. Compared to 2014, inventories shrank in all segments. However, household and general government final consumption expenditure increased. The increase in the former was mostly caused by an increase in expenditure on food, recreation, and transport.
Real gross fixed capital formation fell by 4.5%. Investment in the non-financial enterprises sector decreased most in the equipment, machinery, and transport segments. At the same time, government investment moved up. Although domestic demand decreased, GDP increased, and total final consumption expenditure, gross fixed capital formation, and changes in inventories in total were smaller than GDP by output method, equaling 96.6% of GDP.
Net exports, or the difference between export and import, were positive in 2015. The ratio of net exports to GDP was 4%, which is higher than it was in the previous four years.
GDP grew slower than the number of hours worked and persons employed, which increased by 2.3% and 2.8% respectively. Thus labor productivity per employee and hour worked decreased by 1.6% and 1.1% respectively. Labor costs related to GDP production increased. Unit labor costs grew 5.7% compared to 2014.