The flash estimate published today by Statistics Estonia shows that GDP grew in the third quarter by 2.1% year-on-year and 0.2% quarter-on-quarter. Annual growth in manufacturing and in the retail sales volume index accelerated, indicating an increase in economic activity.

The impact of consumption to overall economic growth was high as fast growth in the retail sales volume index in the third quarter indicates that strong growth in consumption has continued. This has been driven by rising real incomes, which is partly due to higher average wages and partly to falling prices. Declining imports of capital goods indicate a continuing weakness of investments as imports of capital goods grew year-on-year in the third quarter at about the same pace as in the second. There was also a fall in the production of inputs to construction sector.

Despite the weak external demand, the manufacturing sector managed to increase exports. The volume index for manufacturing rose by around 6% year-on-year on average in the third quarter. This was mainly because of exports from manufacturing, which were up in nominal terms by around 7% over the year. Export prices were falling at the same time, meaning that growth in export volumes of manufacturing companies was even faster, reaching 9%. Despite the relatively rapid rise in labour costs, the assessment by manufacturing companies of their own competitiveness has not worsened.

The impact of Russian sanctions on the economy as a whole was small in the third quarter. Once seasonal factors are taken into account, dairy production volumes were around 7% lower in September than July, before the sanctions were introduced. There was also a fall in fish production and fruit and vegetable processing of around 9%. The effect of the fall in these sectors was less than 0.3% of manufacturing output, and as the value added from manufacturing accounts for less than one seventh of GDP, the total impact on GDP is very small.

In September Eesti Pank forecast economic growth for this year of 2.1% and of 2.5% for next year. Eesti Pank will publish a new forecast in December.

Photographs of spokespeople from Eesti Pank can be found in the photo bank at www.eestipank.ee/press/fotopank

Additional information:
Hanna Vaga
Public Relations Office
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