Flash comment: Estonia - May 11, 2012


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Flash comment: Estonia - May 11, 2012: Economic growth in 1Q supported by recovering domestic demand

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Flash comment: Estonia - May 11, 2012

  1. 1. Flash comment: Estonia Economic commentary by Economic Research Department May 11, 2011 Economic growth in 1Q supported by recovering domestic demand Economic growth and confidence According to preliminary data released by Statistics Estonia, the 15% economic growth slowed from 4.5% in the last quarter of last year 115 to 3.9% in the first quarter of this year. Seasonally adjusted 10% quarterly growth was measured at 0.5%. 5% 105 The main contributor to growth was the construction sector, 0% 95 where growth is continuously supported by (re)construction works 2007 2008 2009 2010 2011 2012 of buildings, mostly funded by the public sector. As expected, -5% 85 growth in the retail sector was strong as well. -10% Manufacturing sector, however, which was the main driver of 75 -15% growth at the beginning of last year, contributed negatively to the -20% 65 growth in the first quarter of this year. This was caused mainly by GDP annual grow th (ls) falling output in the manufacturing of electronic and metal products Economic Sentiment Indicator, pts (rs) (due to weaker external demand) and electricity supply (due to increase in imported cheaper electricity). Manufacturing output and retail sales, Although no details were given yet, it can be assumed that the annual growth contribution of net export was negative – exports growth slowed 40% faster compared to imports, as the latter was supported by 30% recovering domestic demand. 20% Outlook 10% Economic growth in 2012 will be founded on strengthening 0% domestic demand and stabilising developments in the competitive -10% 2008 2009 2010 2011 2012 market. Although export growth will remain modest, contribution of smaller manufacturing sectors will increase; nevertheless, the -20% electronics sector will continue to have a high share in total -30% exports. In addition to public sector investments, domestic demand -40% will be supported by growing confidence of households as labour retail manufacturing market situation improves and inflation slows. Although the first quarter preliminary economic growth was somewhat higher than expected, we retain our current forecast of 2.7% growth on average this year. The detailed GDP growth with more detailed data will be published on 8 June. Annika Paabut Chief Economist + 372 6 135 440 annika.paabut@swedbank.eeSwedbank Economic Research Department Flash comment is published as a service to our customers. We believe that we have used reliable sources and methods in the preparation of the analyses reported in this publication.SE-105 34 Stockholm, Sweden However, we cannot guarantee the accuracy or completeness of the report and cannot beek.sekr@swedbank.com held responsible for any error or omission in the underlying material or its use. Readers arewww.swedbank.com encouraged to base any (investment) decisions on other material as well. Neither Swedbank nor its employees may be held responsible for losses or damages, direct orLegally responsible publisher indirect, owing to any errors or omissions in Flash comment.Cecilia Hermansson, +46 8 5859 7720