Estonian economy grew 1.1 pct to EUR 20.5 b in 2015

Photo: Elmo Riig / Sakala

The gross domestic product (GDP) of Estonia increased by 1.1 percent in 2015 over 2014, and the size of GDP at current prices was 20.5 billion euros last year, Statistics Estonia said on Thursday.

In the final quarter of 2015 the Estonian economy grew 0.7 percent compared to the final quarter of 2014.

The year was characterized by a slow but steady growth of the Estonian economy. In the first quarter GDP grew 1.1 percent compared to the first quarter of 2014, whereas in the final quarter of the year the rate of growth was 0.7 percent.

In 2015, the decrease in value added in transportation and storage influenced the Estonian economy the most. The decline in construction and manufacturing activities had a big negative effect on GDP too. Construction volumes on the domestic construction market decreased and value added in construction decreased mainly as a result of a decrease in the construction of structures and repair and reconstruction work in building construction. The biggest economic activity, manufacturing, decreased mainly as a result of weak external demand.

Agriculture, forestry and fishing all made a contribution to GDP growth. In addition, professional, scientific and technical activities and trade contributed the most to GDP growth in 2015. Trade increased mainly on the back of a stable growth in retail sales.

Despite the increase in the first quarter of the year, in 2015, the real export of goods and services fell by 1.1 percent compared to 2014. The import of goods and services decreased 1.8 percent. The decreased export and import of electronic products had the biggest negative impact on Estonian foreign trade.

Similarly to external demand, domestic demand was weak last year. Domestic demand slid 0.7 percent, mainly as inventories decreased. Compared to 2014, inventories decreased in all subdivisions. However, household and general government final consumption expenditures increased. The increase in household final consumption expenditures was mostly caused by an increase in the expenditures on food, recreation and transport.

Real gross fixed capital formation fell 4.5 percent. The investments of the sector of non-financial enterprises in equipment, machinery and transport decreased the most. At the same time, investments by the general government moved up. Although domestic demand decreased, the GDP increased and the total final consumption expenditures, gross fixed capital formation and changes in inventories total was smaller than the GDP by output method, equaling 96.6 percent of GDP.  

Net export, or the difference between export and import, was positive in 2015. The ratio of net export to GDP was 4 percent, higher than in the four previous years.

In 2015, GDP grew slower than the number of hours worked and persons employed, which increased by 2.3 percent and 2.8 percent, respectively. Therefore, labor productivity per employee and hour worked decreased by 1.6 percent and 1.1 percent, respectively. At the same time, the labor costs related to GDP production have increased. Unit labor costs grew 5.7 percent compared to 2014.