GDP shows close to 4% growth in 2018, other indicators also healthy ({{commentsTotal}})

Contribution to GDP growth, 2018.
Contribution to GDP growth, 2018. Source: Statistics Estonia

Economic growth continued in Estonia down to 2018, with a Gross Domestic Product (GDP) increase of 3.9% year-on-year (y-o-y), according to figures released by Statistics Estonia. This is the third consecutive year that GDP growth has exceeded the 3% mark. As a comparison, figures for recent years in neighbouring Finland, as well as the UK, have been well below 2% by some estimates.

When taken by quarter, the increase was even higher, according to SE. Figures for Q4 2018 in isolation showed 4.2% growth compared with Q4 2017.

Imports, exports, domestic demand, investments and labour productivity were all up over the same period.

The overall GDP at current prices was €26 billion, SE has announced. This figure is likely to be the lowest of the three Baltic States, though this reflects Estonia's smaller population.

The main contributors to the growth came from construction, manufacturing, professional, scientific and technical activities, SE says, as well as from transportation and storage, information and communication.

The only significant negative impacts on economic growth came from the agriculture, forestry and fishing sectors, SE says, particularly with poor performance in the second half of the year.

Breakdown:

Value added by sector, y-o-y to 2018

Construction 18.6%

Professional, scientific and technical 13.3%

Information and communication 10.6%

Transportation and storage 9.2%

Mining and quarrying 8.7%.

Manufacturing 5.3%

Trade 0.9%.

The figures for construction were significant as they were the highest since 2011, SE says.

Imports and exports

Exports of goods and services increased 4.3%, mainly due to the growth of the services exports, which in isolation increased by 5.6% (especially with exports of computer and transportation services).

The export of goods taken alone increased 3.6%, principally due to exports of computers, electronic and optical equipment, motor vehicles, trailers and semi-trailers.

Net exports reached 904 million euros in 2018, which is 3.5% of the GDP, SE says.

Imports of goods and services increased 6.1%, which was the fastest growth in the last 6 years.

This was mostly influenced by the imports of machinery and equipment not elsewhere classified, basic and pharmaceutical products and pharmaceutical preparations. The imports of services increased 11.6%, thanks to the imports of travel and transportation services.

Domestic demand

Domestic demand also produced the best results for six years, growing by 5.3%. This was mostly due to final consumption of households, which increased 4.6% in 2018, the highest figure since 2007, SE says.

Investments

The investments increased 3.3% in 2018, a strong result compared with previous years and the result of a rally in the second half of the year, SE says.

The biggest contributions to investment growth came from investments into buildings and structures by non-financial enterprises and from investments into dwellings by households. Investments by non-financial enterprises and the government sector into transport equipment declined.

Labour productivity

In 2018, GDP growth once again surpassed the growth of the number of persons employed, leading to a growth productivity per person employed by 2.6%.

The number of hours worked decreased in 2018, which also caused a productivity growth, of 5.3% per hour worked in this case.

As the pressure on wages continued in 2018, the unit labour cost also increased rapidly, and at 6% surpassed the growth of productivity per hour worked.

Q4 2018

In Q4 2018, Estonian GDP at current prices was €6.8 billion, SE says.

The Estonian economy grew by 4.2% y-o-y in Q4 2018. The seasonally and working-day adjusted GDP grew by 2.2% in Q4 2018 compared with the previous quarter and by 4.3% y-o-y.

The main contributors to the economic growth were construction, transportation and storage and professional, scientific and technical activities. In addition, manufacturing and information and communication also had a significant positive impact. The main hindrances to the economic growth were agriculture, forestry and fishing.

Domestic demand grew 6.0% in Q4 2018. The growth in investments increased significantly in the last quarter, 17.7% compared with the same period of the previous year. Investments increased in all sectors. The main contributors to the growth were the investments in buildings and structures and machinery and equipment by non-financial enterprises. Investments in dwellings by households and investments in machinery and fixed assets for defence purposes by the government sector also increased notably. The final consumption of households grew by 5.1%.

The exports of goods and services grew 4.9% y-o-y. The main contributors to the growth were the exports of computers, electronic and optical equipment. The same goods as well as metal products and machinery and equipment not elsewhere classified contributed to the growth of the imports of goods and services, which grew 6.1%. The share of net exports in GDP was 3.2%.

Productivity per person employed grew 3.3% in Q4 2018, SE says, due to an increase of 1% in the number of persons employed. Productivity per hour worked grew 6.3% because of the decreased number of hours worked. The unit labour cost increased at the same pace.

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Statistics Estonia is a government agency under the aegis of the Ministry of Finance, and provides public institutions, business and research circles, international organisations and individuals with reliable and objective information on the economic, demographic, social and environmental situation and trends in Estonia.

Editor: Andrew Whyte



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