According to Statistics Estonia's flash estimate published today, Estonia's GDP at constant prices increased 8.4%, year-on-year, in the second quarter. Quarter-on-quarter, seasonally and working-day adjusted GDP grew 1.8%.

Exports continued to be the man growth driver. Year-on-year, exports nearly doubled at current prices in the second quarter. Export growth continued to be supported by the favourable external environment, including the recovery of demand for investment goods. However, the share of exports in growth is soon going to decrease. Since the pre-crisis export levels have been surpassed, low reference-based growth has come to an end.

Domestic demand also keeps showing recovery signs. Consumer confidence is higher than the historical average and assessments of the economic situation in Estonia have improved. Nonetheless, consumers do not spend as much as before. Since confidence has increased, but cautiousness has remained, retail sales increased by about 5% in the second quarter, year-on-year. The accommodative monetary policy environment and increasing production capacity have contributed to investment growth.

Global risk aversion has increased again recently. Further economic growth may thus be more volatile. It is very important to ensure the ability to cope with external shocks. Price setting and labour-market flexibility are very important from the point of view of competitiveness. Since the fiscal policy of the European countries is under close scrutiny, it is necessary to ensure sustainable fiscal policy and to start accumulating reserves.

Although growth was rapid in the first half of the year, it is expected to slow according to the spring forecast of Eesti Pank. The central bank forecasts 2011 economic growth to be 6.3%.

Further information:
Ingrid Mitt
Public Relations Office
Telephone: +372 668 0965, +372 512 6843
E-mail: [email protected]