Gross domestic product decreased in the 2nd quarter

Compared to the 1st quarter, the GDP, chain-linked by the reference year 2000 and seasonally and working-day corrected, decreased by 0.9 %.

According to preliminary estimations, decrease in the GDP was most of all influenced by the decrease in the value added of manufacturing, wholesale and retail trade, transport and storage, energy and real estate activities. Decrease in the value added of manufacturing was caused by a small domestic demand and by virtue of that, the decrease in orders. Decrease in the production of food, wood and building materials had a substantial impact. Small domestic demand was a reason for the decrease in the value added of wholesale and retail trade activity as well. Sale of motor vehicles has decreased fast. Decrease in the value added of energy sector has been conditioned by a partial replacement of own production with the imports of electricity.

Fast deceleration in the growth of the value added of financial intermediation, which had started in the 1st quarter, continued. Real growth of the value added decelerated due to the deceleration in the growth of financial and interest income, fees and commissions’ income, as well as due to the increase in interest rates on loans.

Preliminary estimation of the GDP growth has been calculated according to the new methodology. Whereas, Statistics Estonia previously calculated the GDP growth at the constant prices of fixed year 2000, henceforth the growth is calculated by chain-linking method in which the year preceding the accounting period is applied as a base year. The new methodology enables to measure the economic activity more accurately and ensures better international comparability of data. The majority of EU Member States use the chain-linking method in calculating the GDP growth, and the requirement to apply this method proceeds from the EU legislation.

In general, the GDP growth calculated by the chain-linking method since 2001 is somewhat lower than the GDP growth calculated at the prices of fixed base year. Discrepancies between the GDP quarterly growth rates calculated by the two methods remain between -1.6 and +0.2 percentage points. In addition to the changeover to the chain-linking method, the GDP growth correction includes the regular GDP revision for 2004–2007 according to the Supply and Use Tables and Structural Business Survey.

The revised GDP for the 2nd quarter of 2008 calculated by the uniform methodology will be published by Statistics Estonia on 8 September 2008. The GDP components since 2000 and the respective growth rates calculated by chain-linking method will be published on the same date. Calculations by chain-linking method for 1995–1999 will be published by Statistics Estonia in December.

Additional information on the chain-linking method is displayed on the web site of Statistics Estonia: Statistics > Subject areas > Economy > National Accounts.