Economic growth hindered by rising prices

Robert Müürsepp, leading analyst at Statistics Estonia, said that economic growth has been slowed down considerably by rising prices. “Enterprises have seen a strong growth in their turnover and other financial indicators, but the majority of this can be attributed to the very rapid increase in prices,” explained Müürsepp.

In previous quarters, almost all economic activities contributed to economic growth, but this changed in the first quarter. Information and communication had the biggest positive impact, followed by manufacturing, transportation and storage, and professional, scientific and technical activities. The energy sector was the main activity that slowed down economic growth. GDP growth was also hindered by trade and the financial sector, which did not experience a decline during the pandemic.

In spite of rising prices, private consumption grew by 8.3%. Last year’s trend continued, with the biggest increase recorded in expenditures related to going out – hotels and restaurants, clothing and footwear, transport, and recreation and entertainment. People’s expenditures on housing and on food and beverages remained more or less the same year on year.

Investments decreased by 35.3%. A similar fall was recorded in the fourth quarter of last year. The main reason for the decline was the decrease in enterprises’ investments in computer software and databases (-84.5%). There was also a substantial fall in households’ investments in dwellings
(-28.5%). The transport sector fared better as evidenced by the 9.5% increase in enterprises’ investments in transport equipment.

Exports grew by 12.9% and imports by 4.4%. Foreign trade was primarily boosted by trade in electricity, crude petroleum and natural gas, and travel services. Although the transport sector did well in general, there was a significant fall in the purchase and supply of rail transport services in foreign trade.

Compared to the previous quarter, the seasonally adjusted GDP grew by 0.1%. Compared to the first quarter of 2021, the GDP grew by 4.7%.

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 performing.

See also the national accounts section on our website.

More detailed data have been published in the statistical database.