Cbank: Economic growth is supported by consumption, manufacturing

Photo: Peeter Langovits / Postimees

According to a flash estimate published by Statistics Estonia on Tuesday the gross domestic product of Estonia in the third quarter increased by 2.1 percent on year and by 0.2 percent compared to the previous quarter, while annual growth of manufacturing and retail sales accelerated which points to an increase in Estonia's economic activity, the Bank of Estonia reports.

The impact of consumption on economic growth is big, Kaspar Oja, economist at the central bank, said in the bank's commentary. Growth of retail sales volumes accelerated in the third sector which shows continued strong growth of consumption. It is supported by an increase in the real income of households which is affected by the growth of average salaries and wages as well as a decline in prices.

The volume of investments is still small. In spite of weak external demand the export of the manufacturing sector increased.

The impact of Russian sanctions on the economy as a whole remained small in the third quarter.

In September the central bank forecast this year's economic growth to total 2.1 percent and next year's 2.5 percent. The bank is to publish a new forecast in December.

According to economic expert at LHV Heido Vitsur only sporadic and unstable trends of the situation improving can be see on Estonia's main export markets which is why particular acceleration of economic growth should not be expected yet.

The gross domestic product of Estonia increased 2.1 percent in the third quarter of 2014 compared to the same quarter of 2013, a flash estimate published by Statistics Estonia on Tuesday shows.