Yep. In 3rd quarter, our economy grew ten times slower
Editorial: beaten by Latvia?
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This time around, we’re far from being better than Latvia. For the second quarter running, Estonian economic growth is low; meanwhile, Latvians seem to be having a ball – even on construction sites. July to September, Estonia’s GDP grew 0.4 per cent; South of the Border, the figure stands at 4.2 per cent. In Latvian construction, the talk is about a whopping growth of 10 percent. The likeliest explanation: Latvian and Estonian economic cycles do not quite correspond. Basically, we wrestle in the same weight class; our economies are very much alike and, broadly speaking, we are depending on the same trading partners. Does the Latvian economic policy beat ours? For now, let this remain a question of the rhetorical kind...
Alas, however! Latvia’s the sole neighbour having it kind of good right now. Russian economy ministry having cut even the long-term growth expectation, calculating growth below global average for 16 years – comparing this with the high-speed pre-crisis growth shown by Russia, trade with whom helped pull our own exports while recovering from crisis, this surely is a weighty message for us over here, in Estonia.
Despite the multiplied doomsayers, Finnish government has quite gotten their act together; even so, Finns’ endeavours in the fall in no way show in Estonian statistics of the summer. As to our September export to Russia, year-on-year, it’s 15 per cent down. Almost as bad with exports to Sweden – a 14 per cent drop. As revealed by a glance at exports statistics, there does stand out and exceptional figure: to the Latvian market, Estonian enterprises have exported, in September, a fifth more year-on-year.
Our slowdown does have many facets. Domestic consumption, it was predicted, would begin to support growth. And: that’s the way it has been. Should you for some strange reason not believe the statistics, try squeezing into some Tallinn shopping centre parking lot and, once inside the store, sneak a peek into shopping trolleys pushed by fellow citizens. Employment and average wage increase have been remarkable; in some areas of the economy, a stronger growth-word ought to be used.
Explicit, however, is the message preached by the falling foreign demand: on the average, companies have no reason to buy new equipment or build new plants. Spare capacity is sufficient. Should demand on our export markets (Western, mainly) fail to grow, surely entrepreneurs would not increase investments into capital goods. Public sector investments of CO2-quota sales money are ended; availability of the new-period-EU-euros may not be swift enough.
No reason to panic, however, as world economy is on the mend and the abovementioned hiccups in public investments are rather temporary.