Statistics: Economy shrank nearly 3 percent in 2020
The Estonian economy shrank by 2.9 percent in 2020, state agency Statistics Estonia reports, while gross domestic product (GDP) fell by 1.2 percent year on year to the fourth quarter of 2020 (Q4 2020). The culprit was primarily the COVID-19 pandemic and its ensuing restrictions, though foreign trade actually fared well given the conditions.
Manufacturing, trade, and accommodation and food services were the main contributors to the economic decline, Statistics Estonia says.
GDP at current prices stood at €7.3 billion.
Robert Müürsepp, leading analyst at Statistics Estonia, said that the factors behind the economic downturn in the fourth quarter consisted of contractions in the agriculture, forestry and fishing sectors, as well as in accommodation and hospitality, plus administrative and support service activities.
Müürsepp said: "The contribution in manufacturing was negative, but the situation in that economic activity improved to reach pre-pandemic levels. The rapid decline in transportation and storage also slowed down, and there were other signs of the economy recovering at the end of the year. Information and communication and the financial sector made a positive contribution to the economy."
Müürsepp added that low tax receipts slowed the economy down in Q4 2020, just at they had done at the start of the year.
"There was a fall in the receipts of both VAT and excise duties, which was partly caused by the exceptionally high level of tax receipts in the fourth quarter of 2019," he said.
A fall in investments into the financial sector and into transport equipment was also seen.
The coronavirus crisis, which culminated with a lock-down mid-March to mid-May 2020, ravaged foreign trade, Statistics Estonia says. Nonetheless, in the second half of 2020, trade showed signs of recovery, which, the agency says, is a good indicator of how quickly the Estonian economy can adapt.
Foreign trade and household consumption breakdown in 2020
Foreign trade fared well despite the restrictions on international transport, the agency says. The low level of travel services still limited the export and import of services, but trade in goods reached a historically high level.
Both the import and export of goods were boosted by trade in electronic equipment and chemical products – by 14.4 percent and 8.7 percent, respectively. The export of wood products also helped to increase exports, while imports were driven by the import of various machinery and equipment.
Household consumption fell by 2.5 percent in 2020, the result of a fall in consumption of goods and services related to travelling, commuting and leisure activities outside of the home. There was an increase in expenditure related to the stay-at-home lifestyle and health. Healthcare was also the main driver of the 3.6 percent increase in government expenditure in 2020.
Household consumption fell by 1.3 percent in Q4 2020. Expenditure on furnishings, food and communication continued to rise, while consumers spent less on transport, clothing and leisure.
More detailed data is here and here.
National accounts data show how the Estonian economy is doing. The growth or decline of the economy is mainly measured by GDP and gross national income. The higher these indicators, the better Estonia and the people living here are doing, Statistics Estonia reports.
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Editor: Andrew Whyte