Economic growth begins to slow in first quarter of 2018

Construction workers in Estonia. Image is illustrative
Construction workers in Estonia. Image is illustrative Source: Rene Suurkaev/ERR

According to information released by Statistics Estonia on Thursday, Estonia's gross domestic product (GDP) grew by 3.6% on year in the first quarter of 2018.

In the first quarter of 2018, the Estonian GDP was €5.7 billion at current prices.

Compared to the previous quarter, the seasonally and working-day adjusted GDP did not change (decline of 0.1%), however, compared to the first quarter of 2017, the seasonally and working-day adjusted GDP grew by 3.8%.

For the fifth quarter in row, one of the main contributors to economic growth was construction. This was followed by transportation and storage, which had its largest contribution in six years. Significant contributions to the growth came also from manufacturing and information and communication activities. The only economic activity that had a notable negative impact on growth was agriculture, forestry and fishing.

Domestic demand grew by 4.4% in the first quarter. The slowing down in the growth of investments that began in the second half of 2017 became a decline in the first quarter — gross fixed capital formation declined by 8%. The primary factor behind the drop was the decline of investments into transportation equipment and machinery and equipment by non-financial enterprises. Final household consumption grew by 2.8%, meanwhile, which is similar to the growth seen in the second half of last year.

The exports of goods and services grew significantly slower in the first quarter than previously; compared to the same period of the previous year, the growth was only 0.9%. The primary factor behind this slowdown was the decline in the exports of goods. The main contributor was the export of fuels and chemicals. The imports of goods and services maintained their growth rate — 5.4%. The main contributor to growth was the imports of motor vehicles, trailers and semi-trailers and miscellaneous machinery and equipment. The share of net exports in the GDP was 0.8% in the first quarter of 2018.

While the number of persons employed grew, the number of hours worked declined slightly in the first quarter. As a result, the growth of productivity per hour worked significantly outpaced GDP growth — by 6.2%. On the other hand, the productivity per person employed grew by 2.8%. The growth of unit labour cost was 5.5% in the first quarter.

Editor: Aili Vahtla

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