According to revised data, economic growth is yet to be seen

Robert Müürsepp, the national accounts team lead at Statistics Estonia, said that the GDP, which had shown growth in the fourth quarter last year, was again down a little in the first quarter this year. “A month ago, we published a model-based flash estimate which suggested that the economy might be slightly improving. However, the flash estimate underestimated some irregular factors in the fourth quarter. Vehicle sales were exceptionally high in the fourth quarter in anticipation of the introduction of the motor vehicle tax from 2025. But the model could not fully foresee the significant decrease in vehicle sales in the first quarter this year. Also, inflation remains high and affects performance in real terms, despite the faster growth in output at current prices,” explained Müürsepp.

In the first quarter, half of economic activities contributed positively to the GDP, and the other half made a negative contribution. Information and communication was the biggest positive contributor as its value added increased by 13.3%. This was followed by real estate activities (3.7%), human health and social work activities (5.6%), and professional, scientific and technical activities (5.2%). Among the larger activities, value added also increased in manufacturing (1.6%).

The greatest negative impact on the economy came from the energy sector (-22.4%) and transport (-10.3%). Other negative contributors included agriculture (-17.8%) and trade (-3.3%) and also the financial sector where value added was down by 1.6%.

There was a decrease in value added and tax revenue

In the first quarter, value added declined by 0.2% in total. Value added is the total output of enterprises after taking away the value of inputs used for production. In the government sector, value added increased at a slightly faster rate, while the value added of the business sector declined. For the first time since the first quarter of 2023, the value added of the non-profit institutions sector decreased – by 0.1%.

Like value added, net taxes on production also started to decrease. “Smaller receipts from value added tax meant that net taxes on production were down by 0.9% in real terms. The contribution of taxes to the GDP was last negative in mid-2023,” noted Müürsepp.

In the first quarter, private consumption declined by 0.6%. There was a notable fall in people’s spending on accommodation and food services. Households also spent less on miscellaneous goods and services, transport, clothing and footwear, food, and housing. Spending on insurance and financial services increased the most. Compared with the first quarter of 2024, there was also an increase in households’ expenditures on information and communication, furnishings, and health.

The final consumption expenditure of the government sector grew at a faster rate (just like value added in this sector) – by 1.7%. This exceeds the growth shown in any quarter of 2024. Final consumption expenditure in the non-profit institutions sector was down by 1%.

Investments improved, foreign trade continued to grow

The position of investments improved as the decrease was just 0.1%. The main positive contribution came from the general government’s investments in machinery and equipment and weapons systems, which increased by 102.5%. Overall, the general government’s investments grew by 20.6%. Investments in the financial sector also showed significant growth – 66.8%.

On the other hand, investments were down in the non-financial corporations and households sectors. The biggest negative contributions came from the decrease in non-financial corporations’ investments in machinery and equipment (-6.6%) and households’ investments in dwellings (-12.4%).

Foreign trade continued to grow despite the decline in value added. Exports were up by 5.4% and imports by 5.8%. Net exports were a little negative, just like in the previous quarter. The steady growth in foreign trade also means that its share in the GDP has risen to the highest level of the last two years.

Foreign trade was mainly boosted by trade in goods – exports of goods were up by 8.6% and imports of goods by 7%. Trade in crude oil and natural gas, non-monetary gold, and other transport equipment had the biggest influence in the first quarter. Purchases of electricity had a negative impact. There was a modest growth (0.7%) in exports of services, mainly supported by computer and processing services. Imports of services also increased (3.1%), driven by computer services as well as other business services. Construction services and rail freight transport were the negative contributors in imports of services.

The seasonally and working-day adjusted GDP decreased by 0.3% compared with the fourth quarter of 2024 and increased by 0.1% compared with the first quarter of 2024. 

On 15 August, Statistics Estonia will publish revised national accounts data for the years 2021–2024.

National accounts data show how the Estonian economy is doing. The growth or decline of the economy is mainly measured by GDP and gross national income. The higher these indicators, the better Estonia and the people living here are doing.

Statistics Estonia performs the statistical activity “National accounts” for the Ministry of Finance in order to determine how the Estonian economy is doing.

More detailed data have been published in the statistical database. See also the national accounts section on our website. 

When using Statistics Estonia’s data and graphs, please indicate the source.
 

For further information:

Heidi Kukk
Media Relations Manager
Marketing and Dissemination Department
Statistics Estonia
Tel +372 5696 6484 
press [at] stat.ee

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