7/29/2019 Flash comment: Estonia - March 11, 2013

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Flash comment: EstoniaEconomic commentary by Economic Research Department March.11, 2013

GDP growth mainly supported by domestic demand

GDP and export of goods growth

-20%

-15%

-10%

-5%

0%

5%

10%

15%

2007 2008 2009 2010 2011 2012

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

GDP quarterly grow th

export of goods annual real growth (rs)

GDP annual grow th

Contributions to GDP growth, pp

-30

-25

-20

-15

-10

-5

0

5

10

15

20

2007 2008 2009 2010 2011 2012

Net exports GDP, % Domestic demand

Growth of unit labour cost and productivity

-15%

-10%

-5%

0%

5%

10%

15%

2007 2008 2009 2010 2011 2012

ULC Labour productivity per hour

According to the updated national accounts published byStatistics Estonia today, the GDP grew by 3.7% y-o-y in the 4

th

quarter of 2012 and working-day adjusted GDP by 0.9% q-o-q.The annual GDP growth in 2012 was 3.2%.

In the 4th

quarter the transportation and storage contributed themost to the economic growth due to the increase in the valueadded of land and water transport. The growth in constructiondecelerated rapidly from double digit numbers to 3.4% in the lastquarter. In wholesale and retail trade the growth in value addedwas around 5% in the first half of 2012 but decelerated to 1% inthe second half of the year. In manufacturing, despite the growthin output, the value added decreased most of the year and itscontribution to GDP growth was negative. In the 4

thquarter, both

the export and import growth of goods and services acceleratedto 7% and 12% respectively. As import grew faster than exportthe foreign trade balance was negative already sixth quarter in arow. Mostly due to the increased excises of alcohol and tobaccoproducts, net taxes on products contributed one-third of theGDP growth. Despite the rapid decrease in investments in the4

thquarter, robust growth of domestic demand (over 10%)

contributed firmly to the GDP growth. Largest contributor wasthe change in inventories due to the very low base in 2011. Unitlabour costs have grown for quite a while now, which in onehand could increase the inflationary pressures and harm ourcompetitiveness in export markets. In the other hand the

production costs are not growing as fast due to the low importprices.

Outlook

Looking forward we see deceleration in government investmentsand modest growth in corporate investments. The growth indomestic demand should decelerate as well, but import willcontinue to grow faster than export in the near future. Privateconsumption will contribute the most to the domestic demand.Economic growth will decelerate in the first half of 2013.

Tnu Mertsina

Chief Economist

+372 888 7589

tonu.mertsina@swedbank.ee

Swedbank Economic Research Department

SE-105 34 Stockholm, Swedenek.sekr@swedbank.comwww.swedbank.com

Legally responsible publisherMagnus Alvesson +46 8 5859 3341

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