Gross Domestic Product fell by 2.4 percent on year to the third quarter of 2022 (Q3 2022), state agency Statistics Estonia says, and stood at €9.3 billion at current prices.
The energy sector and real estate activities had a significant hampering effect on economic growth, the agency reports.
Leading analyst Robert Müürsepp said: "At current prices, the increase in value added was over 10 percent in almost all economic activities, but this can be attributed to rapidly rising prices."
"The price increases offset real growth in most economic activities and actually led to a decrease in value added in half of economic activities," Müürsepp added.
GDP at current prices in fact rose by 13.9 percent but, as with the first two quarters of the year, the rise mainly occurred in relation to prices.
After adjustment for inflation, a fall in both tax revenue and value added was observed, Statistics Estonia says.
Private consumption, which showed growth in the first six months, saw a downturn in Q3 2022. A 19.3 percent increase in private consumption at current prices was observed, while real value decreased by 0.4 percent, as a result of rapid growth in consumer prices.
Müürsepp said: "Everyday expenditures on housing and transport have increased substantially due to higher energy costs, while actual consumption has grown mainly in terms of expenditures on hotels and restaurants and communication products and services."
The largest fall was experienced in expenditures on furnishings, which people paid more attention to during the pandemic, than post-pandemic, Statistics Estonia says.
Expenditure on health and on clothing and footwear also fell.
The largest net positive contributor to economic growth came in professional, scientific and technical activities, the agency added.
This was followed by the construction sector and accommodation and food service activities, which exceeded pre-pandemic levels.
A modest growth in manufacturing and the transport sector was also seen.
By far the biggest negative contributor came from the agriculture sector, the agency says.
GDP to Q3 2022 quick facts
- Government consumption grew by 1.1 percent, mainly driven by increased expenditures in public administration, defense and education.
- Following a fall for four consecutive quarters, investments stood at the same level as in Q3 2022.
- A rise in households' investments in dwellings (of 21.4 percent) and in enterprises' investments in transport equipment (of 37 percent) was observed.
- Investments in all other types of assets decreased.
- The biggest negative impact came from the fall in enterprises' investments in software and databases (-47.8 percent) and in other buildings and structures (-16.5 percent).
- A moderate growth trend continued in exports (of 3.6 percent) as well as imports (6.2 percent). Both export and import trade remained similar to last year's levels.
- Trade in goods was primarily influenced by energy products and chemical products.
- A strong growth in trade in services was observed, however– exports of services grew by 12 percent and imports by 18 percent, primarily driven by the supply and purchase of travel services and various transport services.
- Seasonally-adjusted GDP fell by 1.8 percent compared with Q3 2021. Compared with Q3 2021, GDP fell by 2.3 percent.
Statistics Estonia conducted the above research on behalf of the Ministry of Finance.
Editor: Andrew Whyte