In the third quarter, the Estonian economy shrank by 1.9%
According to Statistics Estonia, in the third quarter of 2020, the gross domestic product (GDP) decreased by 1.9% year on year. The GDP at current prices was 7 billion euros. Transportation and storage and manufacturing activities were the main contributors to the economic decline.
National accounts data give information on how the economy is performing. Economic growth and decline are measured mainly on the basis of the GDP and gross national income (GNI). The higher these indicators, the better the economic welfare of the country and people.
According to Robert Müürsepp, the economic decline in the third quarter was primarily driven by the economic activities of transportation and storage, and manufacturing. “A significant negative impact came also from real estate activities, and accommodation and food service activities. The construction sector also contracted significantly, whereas in the second quarter, it still experienced growth,” explained Müürsepp.
Financial and insurance activities were the main positive contributor to the GDP; the energy sector and agriculture sector, which had a great yield, showed growth as well. The contribution of information and communication activity was positive but modest, while previously it has been one of the growth engines of the Estonian economy.
“In most economic activities, the downturn continued, but the good news is that the decline was slower, as the restrictions set during the emergency situation were gradually lifted,” said Müürsepp.
Improvement in trade was also reflected in private consumption, which fell only by 0.7%. Expenditure on food, home furnishings and leisure goods increased the most, but communication and healthcare expenditures were also larger. Spending on clothing and footwear as well as transportation continued to decline.
In the third quarter, exports fell by 8.6% and imports by 2%. The main reason for this was the decline in freight transport and travel services. The adjusting of the economy could be noticed in the exports of goods, which grew on account of the exports of electronics by 3.9%. This was also the strongest quarter for the exports of goods since the third quarter of 2019.
In the first half of the year, the contribution of taxes to the GDP was negative, but in the third quarter, taxes helped to revive the economy: primarily as excise revenue increased. The general government consumption continued to grow, mainly in connection with increased spending on healthcare and education.
Although the economy performed better in the third quarter, investments were still modest. While the investments of the general government sector increased significantly (18.1%), a noticeable decline was recorded in enterprises’ investments into transport equipment (41.1%) and households’ investments into dwellings (17.8%).
Compared to the second quarter of 2020, the seasonally adjusted GDP grew by 3.3%, and compared to the third quarter of 2019, fell by 2.7%.
Statistics Estonia performs the statistical activity “National accounts” for the Ministry of Finance in order to determine how the Estonian economy is performing.
More detailed data have been published in the statistical database.
See also the national accounts section on our website.
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