Estonia’s recession enters fourth quarter
Text Mark Taylor Photo Kurt Cotoaga / Unsplash
According to data released by Statistics Estonia, the Gross Domestic Product (GDP) of the country decreased by 2.9 per cent in the second quarter of 2023 (April, May, June) compared with the same quarter a year earlier.
“Despite a considerable slowdown in inflation in the second quarter, the overall economic situation has not improved substantially,” said Robert Müürsepp, a team lead of national accounts at Statistics Estonia.
“To date, the Estonian economy has been in significant decline for three consecutive quarters. There was a decrease in value added in most economic activities as well as in tax revenue when adjusted for price changes. However, the recession in the second quarter was slightly slower than in previous quarters,” Müürsepp added.
By activity, the largest positive contribution came from trade. Thanks to slower price growth, trade in the second quarter returned to pre-pandemic levels. Real estate activities also made a noticeable positive contribution.
The biggest drag on the economy was transportation and storage. The energy and construction sectors made significant negative contributions as well. In addition, growth has come to a halt in accommodation and food service activities, which previously grew strongly after the Covid-19 crisis.
Private consumption, which involves all purchases made by regular consumers, has now decreased for four consecutive quarters, accelerating to 3.3 per cent in the second quarter.
“Investments also had a weaker quarter, falling to pandemic-time levels (−18.7 per cent),” said Müürsepp.
The poor international economic situation was reflected in foreign trade. Exports continued at the pace of the previous quarter, falling by 6 per cent. The fall in imports deepened to 9.1 per cent. “However, it is encouraging to see an increase in exports of services, led by transport, advertising, and computer services,” Müürsepp added.
The seasonally and working-day adjusted GDP decreased by 0.2 per cent compared with the first quarter of 2023 and by 3.0 per cent compared with the second quarter of 2022. The GDP of Estonia amounted to 9.4 billion euros.
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