In the first quarter of 2022, Estonia’s gross domestic product grew by 4.3% year on year and the GDP at current prices was €8 billion; however, the economic growth has been slowed down by the rising prices.
Robert Müürsepp, a leading analyst at Statistics Estonia, the country’s official statistics agency, said the country’s economic growth had been slowed down considerably by rising prices.
“Enterprises have seen a strong growth in their turnover and other financial indicators, but the majority of this can be attributed to the very rapid increase in prices,” Müürsepp said in a statement.
In previous quarters, almost all economic activities contributed to the economic growth, but this changed in the first quarter, the agency said.
“Information and communication had the biggest positive impact, followed by manufacturing, transportation and storage, and professional, scientific and technical activities. The energy sector was the main activity that slowed down economic growth. GDP growth was also hindered by trade and the financial sector, which did not experience a decline during the pandemic,” Statistics Estonia pointed out.
Private consumption grows, investments decline
In spite of the rising prices, private consumption grew by 8.3%. “Last year’s trend continued, with the biggest increase recorded in expenditures related to going out – hotels and restaurants, clothing and footwear, transport, and recreation and entertainment. People’s expenditures on housing and on food and beverages remained more or less the same year on year.”
Investments decreased by 35.3%. A similar fall was recorded in the fourth quarter of last year. The main reason for the decline, according to the statistics agency, was the decrease in enterprises’ investments in computer software and databases (-84.5%). There was also a substantial fall in households’ investments in dwellings (-28.5%). The transport sector fared better as evidenced by the 9.5% increase in enterprises’ investments in transport equipment.
“Exports grew by 12.9% and imports by 4.4%. Foreign trade was primarily boosted by trade in electricity, crude petroleum and natural gas, and travel services. Although the transport sector did well in general, there was a significant fall in the purchase and supply of rail transport services in foreign trade.”
Compared with the previous quarter, the seasonally adjusted GDP grew by 0.1%. Compared with the first quarter of 2021, the GDP grew by 4.7%.