There were several one-off factors behind Estonia's gross domestic product (GDP) dynamics in the final quarter of last year and growth in 2013 is likely to be of similar size as the full-year figure for 2012, analysts speaking to BNS said on Monday.
Estonia's Q4 GDP growth was linked to several one-off factors - analysts
11th March 2013, 17:32
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Tõnu Mertsina, chief economist at Swedbank Eesti, pointed out that increased receipts of net taxes of products contributed approximately one-third of GDP growth as stocks were being created of tobacco products and spirits ahead of the hike in excise duties at the beginning of the new year.
In 2013, economic growth is seen to decelerate somewhat in the first half of the year while investments by companies are expected to grow at a moderate rate, Mertsina said.
Growth in domestic demand is likely to decelerate, he said, adding that import was set to grow faster than export in the near term. Inflationary pressure from labor costs and related possible deterioration of competitive capability is likely to be balanced off by a slower increase in import prices, which will result in lower production costs.
Ruta Arumäe, analyst at SEB Pank, described economic growth in the final quarter as driven by unusual and unexpected sectors. "There were many one-off factors behind the acceleration of GDP growth in the fourth quarter," she said, adding that rapid growth in domestic demand, for instance, resulted from the general government's increased defense related spending.
"Apparently it is a one-off factor in the fourth quarter as a result of which growth in the first quarter of 2013 will turn out weaker," Arumäe said, also naming increased excise receipts ahead of the hike as one of the one-offs.
Tõnu Palm, chief economist for Nordea Pank Eesti, said that growth last year put the reference base quite high and it would be a very good result even if that growth was maintained this year.
Palm said his optimistic base scenario was that vigorous investment by businesses would offset the negative effect from more moderate investment by the government, consumers would be more optimistic about the economy and tap into some of their savings given the record low saving rates.
Speaking on behalf of LHV Pank, analyst Heido Vitsur said that somewhat, but not substantially faster economic growth can be expected also for this year if the external environment, the factor influencing the Estonian economy the most, will not deteriorate but will start improving instead. He said Estonia's GDP is expected to grow by 3.5 to 4 percent in 2013.
At the same time, unexpected things can happen because the volume of Estonia's exports and consequently of GDP depends to a substantial degree on the success of a few large international companies, he added.
Violeta Klyviene, senior analyst at Danske Markets, told BNS her GDP growth estimate for Estonia for 2013 was 3.3 percent, based on a small but positive increase in exports and moderate increase in domestic demand. Investments are expected to increase in the private sector alone. For Estonia's growth rate to be bigger the economies of the euro area and the Nordic countries need to recover first, said Klyviene, adding that economic growth was not expected to accelerate significantly before 2014.