According to Statistics Estonia, in the first quarter of 2024, the gross domestic product (GDP) decreased by 2.4% compared with the same period of 2023. The GDP at current prices amounted to 8.9 billion euros.
Robert Müürsepp, the national accounts team lead at Statistics Estonia, said that the economy shows some signs of recovery compared with the year before. “But compared with the fourth quarter of 2023, there were no significant changes in the trends. There were still few economic activities with a positive contribution to the GDP,” explained Müürsepp.
For the second quarter running, the biggest positive contributor was agriculture, forestry and fishing.
It was followed by real estate activities, and public administration and defence with more modest contributions. The activities with the biggest negative contribution were energy supply and manufacturing. Professional, scientific and technical activities, and trade also had a strong negative impact on the economy. Transportation, construction, and information and communication hampered economic growth marginally.
In the first quarter, value added declined by 3.7% in total. Value added is the total output of enterprises after taking away the value of inputs used for production. The biggest impact on value added came from the non-financial corporations sector where value added fell by 5.3%. The value added of the financial sector decreased by 4.6%. The general government and non-profit institutions sectors made a positive contribution, as their value added was up by 3.9% and 3.6%, respectively.
“Net taxes on production had a positive impact despite the increased VAT rate. There is a very simple reason – in the same quarter last year, the payment of energy subsidies reduced net taxes on production, but these subsidies were no longer available this year,” explained Müürsepp.
Private consumption had grown a little in the fourth quarter of last year, but it decreased again in the first quarter of this year (by 1.4%). There was a considerable rise in just two expenditure categories: education, and restaurants and hotels. Expenditures on clothing and footwear, alcoholic beverages and tobacco, furnishings, and transport decreased significantly.
Investments showed growth for the third quarter in a row and were up by 11.1%. This was mainly due to enterprises’ investments in other buildings and structures (41%) and in machinery and equipment (21.9%). The biggest negative impact came from households’ investments in dwellings (9.2%).
Foreign trade has been in decline for a year and a half.
In the first quarter, exports fell by 7.8%. Net exports remained positive, as imports decreased by 6.7%. In trade in goods, both exports and imports were down by about 10%, which was primarily due to trade in electricity and the manufacture of wood. In trade in services, exports fell by 2.2% while imports grew by 2.2%. Exports of services were affected by sea and rail transport. Imports of services were boosted by the increased purchases of construction services.
The seasonally and working day adjusted GDP decreased by 0.5% compared with the fourth quarter of 2023 and by 2.1% compared with the first quarter of 2023.