Robert Müürsepp, the national accounts team lead at Statistics Estonia, said that the fourth quarter marked the end of 10 quarters of recession.

"The last time the GDP grew was in the first quarter of 2022," he said in a statement.

In contrast to previous quarters, the majority of activities had a positive impact on the economy.

"The energy sector led the way, with value added increasing by 21 percent. This was followed by real estate activities and information and communication – both saw their value added rise by 5.7 percent. Notably, manufacturing also recovered from the crisis, growing by 0.5 percent. The value added of trade increased by 0.8 percent," added Müürsepp.

However, the construction sector was down by 12.9 percent. Transportation and storage and administrative and support service activities also saw a decline.

The GDP at current prices amounted to €10.6 billion in the final quarter of last year and to €39.5 billion in 2024 as a whole.

Value added and private consumption rises

The impact of tax revenue on the GDP turned positive already in the fourth quarter of 2023, while value added increased in the last quarter for the first time since the third quarter of 2022. Value added is the total output of enterprises after taking away the value of inputs used for production.

A significant change occurred in the value added of the business sector, where the earlier downward trend came to an end and value added remained at the level of the fourth quarter of 2023.

The value added of the general government and non-profit institutions sectors continued to grow, increasing by 2.1 percent and 3.1 percent respectively. The increase in tax revenue was driven by VAT and excise duty on fuel.

A positive turnaround was also seen in private consumption, which grew at the same pace as the GDP – by 1.2 percent. There was a rise in most of the expenditure categories. The biggest increase occurred in expenditures on insurance and financial services, transport, and information and communication. Expenditures on clothing and footwear decreased significantly. A slight decrease in expenditures on food, housing, and other goods and services was observed.

However, the final consumption expenditure of the government sector began to fall, dropping by 1.1 percent. Final consumption in the non-profit sector continued to grow, increasing by 3.1 percent.

Investments declined, while foreign trade grew

As in the third quarter, investments continued to fall in the fourth (–10.3 percent). This was mainly due to the investments of the government sector (–19.3 percent) and households (–18.1 percent).

In the government sector, the fall in investments in other buildings and structures (–24.4 percent) and in machinery and equipment (–26.3 percent) had the biggest impact. A significant drop was seen in households' investments in dwellings (–9.2 percent), whereas investments in transport equipment were up by 71.9 percent.

The improved performance of the economy was also seen in foreign trade, which showed growth again in the fourth quarter. Exports of goods and services were up by 3.2 percent and imports by 3.5 percent. In exports of goods, there was an increase of 4.9 percent, primarily due to exports of wood products and metal products. Imports of goods grew by 6.7 percent, boosted by imports of metal products and vehicles. Foreign trade in services was slightly more subdued in the fourth quarter. Exports of services grew by just 0.5 percent and imports fell by 3.2 percent. Passenger air transport, computer services, and other business services stood out positively. Performance was hampered by construction and freight transport services.

In the fourth quarter of 2024, the seasonally and working-day adjusted GDP increased by 0.7 percent compared with the third quarter and by 1.1 percent compared with the fourth quarter of 2023.

GDP declined by 0.3 percent in 2024

Economic performance improved from quarter to quarter last year. The biggest improvements were seen in the value added of enterprises and in foreign trade. For 2024 as a whole, both showed a decline (–1.1 percent), but after the downturns at the beginning of the year they grew at the end of the year. The trend was consistently upwards.

Among the economic activities, real estate activities, information and communication, and agriculture were the largest positive contributors in 2024. Larger activities such as construction, manufacturing and trade hampered economic growth the most. 

Private consumption and investments were volatile. Private consumption ended the year on a positive note, while investments declined in the second half of the year. The latter was largely due to the high reference base of 2023.

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