Decline in the economy decelerated in the 4th quarter

news release no 21

According to Statistics Estonia, by flash estimates, the gross domestic product (GDP) of Estonia decreased by 9.4% in Estonia in the 4th quarter of 2009 compared to the same quarter in the previous year.

In the 1st quarter the GDP decreased by 15.0%, in the 2nd quarter by 16.1% and in the 3rd quarter by 15.6%.

The decrease of the value added decelerated in the majority of economic activities. By flash estimates the decrease in the value added in the wholesale and retail trade accelerated, caused by continually weak domestic demand.

The decrease of the value added of the industrial sector decelerated to -17% (in the 3rd quarter the decrease was -28%), largely based on convalesce of external demand. Deceleration of the decrease in exports of goods of manufacturing and total economy continued in the 4th quarter. Whereas the domestic demand was small, domestic orders of the manufacturing production continually decreased. Sales of manufacturing on the domestic market were still in downtrend, although evinced signs of slight improvement. At the same time, one reason for the improvement of the situation is the low comparing base period of the 4th quarter 2008, when the value added of manufacturing steeply decreased.

Substantially bigger receipts of excise taxes than customary due to the stocking up of excise goods before the rise of excise taxes since the 1st of January 2010 contributed largely to the deceleration of the decrease in the GDP.

Compared to the 3rd quarter, the seasonally and working-day adjusted GDP increased by 2.6% in the 4th quarter.

Real growth rate of the GDP, industrial sector and exports of goods,
1st quarter 2005 – 4th quarter 2009

Diagram: Real growth rate of the GDP, industrial sector and exports of goods, 1st quarter 2005 – 4th quarter 2009

Industrial sector consists of mining, manufacturing, electricity, water and gas supply and construction activities, accounting for approximately a quarter of the gross value added of the total economy.

The first estimate of the GDP for the 4th quarter of 2009 calculated in accordance with the internationally recognized methodology will be published by Statistics Estonia on 11 March.

For further information:

Tõnu Mertsina
Head of National Accounts Service
Statistics Estonia
Tel +372 625 9353