According to information released by Statistics Estonia on Wednesday, Estonia's gross domestic product (GDP) grew 4.9 percent on year to €23 billion in 2017.
Economic growth in 2017 was the fastest seen in five years. Primary contributors to the broad-based growth were construction, information and communication, and professional, scientific and technical activities. The contribution of manufacturing grew gradually throughout the year. No economic activity had a strong negative impact on the economic growth. Also agriculture, which had been hindering the economic growth since the 2nd quarter of 2016, began to grow in the second half of 2017. At the same time, trade, which had driven economic growth in 2016, became the biggest drawback to the growth in the second half of 2017.
Supported by programming and software development, the value added of information and communication grew by 15.6 percent. The value added of professional, scientific and technical activities grew at almost the same rate — 13.9 percent. The value added of Estonia’s largest economic activity, manufacturing, grew despite modest results in the 2nd quarter at the fastest pace in three years — by 3.9 percent. The value added of trade, which went into decline in the second half of the year, grew only by 1.8 percent.
Net taxes on products did not grow significantly in 2017. Due to an increase in tax revenue, their growth at current prices was 5.4 percent, but the growth corrected for inflation was only 0.1 percent.
Despite the modest increase in the middle of the year, exports of goods and services grew 2.9 percent in 2017. The main contributor was the still solid growth in the exports of services, which reached 6.2 percent. This was mostly due to the exports of transport and computer services. The main hindrance to the exports of goods was the decline in the exports of electronic equipment. The imports of goods and services grew by 3.5 percent. The most significant contributor to this was the imports of vehicles. Net exports reached 980 million euros in 2017, which is 4.3 percent of the GDP. This is the largest share in the GDP in six years.
The growth in domestic demand accelerated for the second consecutive year, reaching 4.2 percent. This was led by the growth in investments (13.1 percent), which had been in decline for the past three years. Compared to 2016, investments grew in almost every sector and economic activity. The biggest impact on the GDP came from the investments in machinery and equipment by the government sector (0.4 percent), and in other buildings and structures by the government sector (0.5 percent) and nonfinancial enterprises (0.4 percent). Final consumption of households grew by 2.0 percent in 2017. The final consumption expenditures of the government sector grew by 0.8 percent, supported by the EU presidency.
In 2017, the growth of the GDP surpassed the growth of the number of hours worked and persons employed for the second consecutive year. As a result, productivity per hour worked grew by 1.9 percent and per person employed by 2.1 percent. While at current prices, the increase in labour costs slowed down a bit, unit labour cost grew by 3.6 percent.
Editor: Aili Vahtla