Gross domestic product (GDP) fell by 0.7 percent in the first quarter of 2020 compared to the first quarter of 2019, figures released by state agency Statistics Estonia showed on Friday. GDP at current prices stood at €6.5 billion.
Value added grew by 2 percent, Statistics Estonia reports, driven primarily by information and communication and construction.
Economic growth was hindered mainly by the energy sector, largely due to warm winter and reduced heating costs. Of larger economic activities, manufacturing, which began to decline already in the second half of 2019, harmed economic growth.
Robert Müürsepp, the leading analyst at Statistics Estonia, said the impact of the coronavirus was not yet considered. "However, the virus seems to have negatively affected trade, transport, and accommodation and food service activities," he added.
The main reason for the economic downturn are net product taxes, which fell in the first quarter by 18.8 percent, mainly due to a drop in VAT and fuel excise duty receipts.
Household consumption growth also decelerated markedly to only 0.3 percent, which is the most modest growth since the last major crisis.
"Investments declined by 6.9 percent, but not due to the coronavirus but rather because manufacturing has shown a long-term downward trend and the investment level in the 1st quarter of 2019 was very high," explained Müürsepp.
Investments by enterprises into transport equipment and machinery and other equipment dropped the most. At the same time, the investments of the government sector into buildings and structures and households' investments into dwellings increased.
In the first quarter, exports dropped by 2.6 percent and imports by 5.2 percent. Similarly to manufacturing, foreign trade slowed down already last year. The exports and imports of goods declined at the end of last year and were now followed by foreign trade in services. The main contributors to the decline were electronic equipment and travel services.
Compared to the fourth quarter of 2019, the seasonally adjusted GDP fell by 3.7 percent and compared to the first quarter of 2019, by 0.8 percent.
More detailed data has been published in the statistical database.
Editor: Roberta Vaino