International Internet Magazine. Baltic States news & analytics
Thursday, 20.11.2014, 22:45
In 2012, economy of Estonia grew by 3.2%
In 2012, the GDP at current prices was17.0 billion Euros.
In the first three quarters of 2012, the GDP growth was mainly driven by construction. The increase of the construction market was driven by repair and reconstruction works of buildings and civil engineering. This growth is caused by reconstruction works done with allowances’ revenue for general government buildings. In the 4th quarter transportation and storage contributed the most successively to the economic growth due to the increase in the value added of land and water transport.
The economic growth in Estonia depends substantially on foreign demand, whereas the main exporters are manufacturing enterprises. During 2010 and 2011, the increase of the value added of manufacturing was the main contributor to the GDP growth. In 2012, the decrease in the value added of manufacturing inhibited the GDP growth the most, influenced mainly by the decrease of the manufacturing of computers, electronic and optical products and manufacture of food products. The economic growth was negatively influenced also by the decrease in the value added of construction and mining and quarrying. The value added of real estate activities at current prices increased, but due to the fast growing prices the value added at constant prices decreased.
In 2012, employment and hours worked grew slower than the GDP (2% and 0.4%, respectively). Therefore the labour productivity per employee and hours worked increased by 1% and 3%, respectively. At the same time labour costs for the GDP production have increased. Unit labour cost grew 6% compared to 2011. This estimate has decreased during the previous 2 years.
Economic growth in Estonia was supported appreciably by domestic demand, which increased by 8% in 2012. If in the first three quarters of 2012 the GDP by output method was bigger than domestic demand, then in the 4th quarter the share of the domestic demand in the GDP was 103.4%. In 2012, this estimate was 99.1%. The increase of domestic demand was mainly caused by the gross capital formation, which grew 21%, especially due to business sector and government sector investments in buildings and structures. Inventories of materials of the business sector decreased. Household final consumption expenditures increased by 4%, influenced mainly by the increase in purchase of alcoholic beverages, vehicles and operation of personal transport equipment.
In 2012, the export of goods and services grew by 6% in real terms. The export of goods increased by 7%, influenced mainly by the fast growth of exports of computers, electronic and optical products in the 4th quarter. In the first three quarters of 2012 the export of goods was also supported by the exports of other machinery and equipment. The import of goods and services increased by 9% in 2012 compared to 2011, mainly due to the import of machinery and equipment, electrical equipment and computers, electronic and optical products. The share of net exports in the GDP was negative in the 1st and 4th quarters (-0.7% and -1.5%, respectively), but the total share for 2012 was 0.5%.
4th quarter 2012
The GDP at current prices was 4.47 billion Euros in the 4th quarter. Compared to the 3rd quarter, the seasonally and working-day adjusted GDP increased by 0.9% in the 4th quarter. Compared to the same quarter of the previous year, the GDP growth was 3.5%.
The increase of value added of transportation and storage has the biggest impact on economic growth in the 4th quarter. The value added of transportation and storage grew mainly with the support of land and water transport. Additionally, the value added of information and communication (more precisely telecommunication) and agriculture, forestry and fishing upheld the growth of the GDP.
In addition to the mentioned sectors, the GDP growth was also influenced positively in excise taxes, which are part of net taxes on products. The growth of net taxes of products was 10%.
Manufacturing activity, being the biggest activity in Estonian economy, was significantly slowing down the growth of the GDP in the 4th quarter. The main reason for this decrease was the decline of the value added of fabricated metal products, manufacture of chemicals and chemical products and manufacture of electrical equipment.
In the 4th quarter the GDP grew faster than employment, while hours worked decreased. Therefore the labour productivity per employee and hours worked of the total economy increased by 2% and 4%, respectively, compared to the same quarter of the previous year. Labour productivity is calculated by seasonally and calendar adjusted figures. At the same time labour costs for the GDP production have increased. Unit labour costs increased by 7% compared to the same quarter of the previous year, which indicates that the compensations per employee have grown faster than the productivity. Unit labour cost increased for the fifth quarter in succession.
|Growth of the value added of economic activities, 4th quarter 2012|
The growth of domestic demand increased to 11% in the 4th quarter of 2012, accounting for 103.4% of the GDP. Household final consumption expenditures increased by 5%. Accretion in the purchase of recreational and cultural services (sporting services, services provided by cinemas and theatres), purchases of electricity, gas and other fuels and consumption of alcoholic beverages contributed the most to the rise of household final consumption expenditures. The growth of domestic demand was significantly affected by the growth of government consumption expenditures by 6%, affected by the increase of military expenditures.
In the 4th quarter of 2012, the export growth of goods and services accelerated to 7%, import of goods and services to 12%. Estonian foreign trade was mainly influenced by the growth of the import and export of computers, electronic and optical products. In the 4th quarter, the share of net exports in the GDP was -1.5%, e.g. in the 4th quarter the import was bigger than export.
In the 4th quarter for Gross Fixed Capital Formation estimates correction was made approximately – 110 million Euros because there was an error in the 3rd quarter of 2012. The preliminary numbers for 2012 are correct. On 9th September 2013, Statistics Estonia will publish the revised GDP time series with the improved quarterly data of 2012.