Analytics, Economics, Estonia, GDP, Investments

International Internet Magazine. Baltic States news & analytics Wednesday, 16.10.2019, 03:03

Decrease in investments main reason behind deceleration of Estonian economic growth

BC, Tallinn, 01.06.2018.Print version
A decrease in investments was the main reason behind Estonia's economic growth decelerating in the first quarter, economic analyst at SEB Mihkel Nestor said, cites LETA/BNS.

"The main reason behind economic growth slowing down in the first quarter was a strong decline in investments, which totaled 8% in constant prices," Nestor said in a press release.

The gross domestic product of Estonia grew by 3.6% in the first quarter of 2018, compared to the same period of the previous year, totaling 5.7 billion euros at current prices, Statistics Estonia said on Thursday.

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

According to Nestor, the impact of the income tax reform cannot be seen in consumption. "The precondition of previous forecasts was an increase in incomes as a result of the income tax reform, which increased consumption opportunities for most people. But so far the impact of the reform cannot be seen and retail trade has continued to grow at the same speed," he added.

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