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Statistics Estonia: Downturn accelerated again in Q3 2023

Timber industry (photo is illustrative).
Timber industry (photo is illustrative). Source: Ministry of Economic Affairs and Communications

Gross Domestic Product (GDP) in Estonia fell 3.9 percent on year to the third quarter of 2023 (Q3 2023), state agency Statistics Estonia reports. This was a greater decline than posted for the first half of 2023.

GDP at current prices amounted to €9.4 billion in Q3, Statistics Estonia adds.

Commenting on the data, team lead of national accounts at Statistics Estonia Robert Müürsepp said: "There were some signs of economic improvement in the second quarter, but the decline in the third quarter accelerated to the level seen in previous periods. Both VAT and tax revenues continued to fall."

GDP at current prices rose by 1.2 percent in Q3 2203, Müürsepp added; while inflation continues to slow, this has not helped to boost the economy, he went on.

Müürsepp noted that in Q3 2023 the weakest in terms of value added was transportation and storage, where conditions deteriorated further due to hard times in foreign trade.

"The situation with manufacturing is almost as difficult. Other major negative contributors were information and communication, and professional, scientific and technical activities. Both of these activities have often been key drivers of the Estonian economy. Value added also declined significantly in construction," Müürsepp went on.

Contribution to GDP growth. Source: Statistics Estonia

Q3 2023 GDP and economy quick Facts (source: Statistics Estonia).

  • In the first half of the year, net exports remained positive, but in Q3 2023, Estonia's imports exceeded exports by €136 million.
  • This was, the agency says, the result of a fall in exports (down by 12.1 percent) being faster than the fall in imports (which fell 6 percent), in Q3, meaning share of exports making up Estonia's GDP has fallen to the level it was in Q1 2020.
  • Exports of services also saw a downturn, Statistics Estonia says.
  • While imports of goods continued to fall, imports of services was an upturn and rose by 6.2 percent.
  • Foreign trade was negatively affected by sales of electricity, computers and electronic equipment, and various transport services.
  • Foreign trade was boosted by passenger rail transport and computer services.
  • Value added fell by 5.1 percent for non-financial corporations and by 6.5 percent for financial corporations.
  • In the general government sector, a 3.6 percent increase in value added was experienced, however, with the fastest growth occurring in the non-profit institutions sector (up by 6.5 percent).
  • The contribution to value added by economic activity was similar the picture in Q2 2023, with the most significant positive contributor clearly being real estate activities.
  • Trade also maintained the same pace as the previous quarter, a pace Statistics Estonia describes as "good."
  • Considerable positive contributions from the agriculture, forestry and fishing, and energy sectors were also seen.
  • Private consumption recovered slightly as the decline slowed down to 2.4 percent. The largest fall was posted in expenditures on miscellaneous goods and services, and clothing and footwear.
  • A significant decrease in households' spending on furnishings and household equipment, alcoholic beverages and tobacco, and recreation and culture was seen.
  • Expenditure on housing constituted the only rise.
  • For the first time since the first quarter of 2022, government consumption also decreased, by 0.6 percent.
  • Year-on-year, investments rose by about 10 percent. The most significant contributor here was the non-financial corporations sector with a 54.5 percent rise recorded in their investments in other buildings and structures.
  • General government investments in other buildings and structures rose by 17.1 percent.
  • The largest negative contributions came from a fall in non-financial corporations' investments in machinery and equipment (down by 8.9 percent) and transport equipment (down by 16.2 percent).
  • Seasonally and working-day adjusted GDP decreased by 1.3 percent compared with the second quarter of 2023 and by 4.0 percent compared with the third quarter of 2022.
GDP growth on quarter. Source: Statistics Estonia

National accounts data show how the Estonian economy is doing, Statistics Estonia says. The growth or decline of the economy is mainly measured via GDP and gross national income. The higher these indicators, the better Estonia and its citizens and residents are doing, the agency says.

Statistics Estonia performed the above study on behalf of the Ministry of Finance.

More detailed information from Statistics Estonia is available here and here.

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Editor: Andrew Whyte

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