Growth in the Estonian economy was driven by exporting branches
The Estonian economy grew by 4.2% over the year in the third quarter and by 1% over the quarter. The growth was driven by exporting branches, while one-off factors also played a large role.
Global trade is being restrained by trade barriers and problems in several individual sectors, and so exports were down in almost all economic areas in the third quarter. It should be noted though that although trade declined practically everywhere, industrial output still increased in some areas, which indicates that value chains have changed. Production has not declined as much as trade has, and it has probably been partly relocated. Industrial output increased in China, the USA, Central and Eastern Europe, and the Nordic countries.
Estonian companies have so far coped well with the problems in global trade. Exports increased by 7% at constant prices, with growth in exports of both goods and services contributing. The growth in exports is reflected in manufacturing and information technology, and by the rapid growth in business services.
Growth in the economy was supported not only by the positive developments in exports, but also by temporary factors. A cut in alcohol excise increased the contribution of net taxes to growth, partly because purchases were deferred in the second quarter. There was a sharp rise in the value added of agriculture, which makes a very variable contribution to growth in the economy. Growth was held back by the oil shale sector, where problems were caused by the decline in the competitiveness of oil shale electricity as a consequence of European climate policy.
Though growth remained fast in the third quarter, businesses expect that it will slow in future. The general cooling of the global economy will gradually cool the Estonian economy too.
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