The Estonian gross domestic product fell by 0.7 per cent in the first quarter of 2020 – even before the coronavirus crisis, according to Statistics Estonia, the country’s statistics agency; the GDP at current prices was €6.5 billion.
The economic growth was hindered mainly by the energy sector, mostly due to a warm winter and reduced heating costs. Of larger economic activities, manufacturing, which began to decline already in the second half of 2019, had a negative impact on economic growth, the agency said.
According to Robert Müürsepp, a leading analyst at Statistics Estonia, the impact of the novel coronavirus was not yet considerable. “However, the virus seems to have negatively affected trade, transport and accommodation and food service activities,” he said in a statement.
Net product taxes fell by 18.8%
The main reason for the economic downturn are net product taxes, which fell in the first quarter by 18.8%, mainly due to a drop in value added tax and fuel excise duty receipts, the statistics agency said.
Household consumption growth also decelerated markedly to only 0.3%, which is the most modest growth since the last major crisis.
“Investments declined by 6.9%, but not due to the coronavirus but rather because manufacturing has shown a long-term downward trend and the investment level in the first quarter of 2019 was very high,” Müürsepp asserted.
Both exports and imports dropped in the first quarter
Investments by enterprises into transport equipment and machinery and other equipment dropped the most. At the same time, the investments of the government sector into buildings and structures and households’ investments into dwellings increased.
In the first quarter, exports dropped by 2.6% and imports by 5.2%. Similarly to manufacturing, foreign trade slowed down already last year. The exports and imports of goods declined at the end of last year and were now followed by foreign trade in services. The main contributors to the decline were electronic equipment and travel services.
Compared with the fourth quarter of 2019, the seasonally adjusted GDP fell by 3.7% and, compared with the first quarter of 2019, by 0.8%.
Cover: A business district in Tallinn’s Maakri Quarter. The image is illustrative. Photo by Rasmus Jurkatam.
