Economic growth decelerates in 2007

10 Mar '08

4 min read

Deceleration of the GDP growth continued in the 4th quarter being influenced by deceleration in the growth of domestic demand, by decrease in the exports and imports of goods and services and hence by a steep deceleration in the value added growth of corporations' sector.

Domestic demand grew by 5.5% in the 4th quarter. Within the components of domestic demand, the growth rate of household final consumption expenditure decelerated to 3.3% compared to the 4th quarter of 2006 mainly due to the deceleration in the growth of expenditures due to the decrease in the expenditures on clothing and footwear.

Capital investments grew by 5.6%. Investments by non-financial corporations supported the total investments of the economy the most, whereas the investments made by financial, general government and households' sectors decreased.

Exports and imports of goods and services decreased at constant prices in the 4th quarter. Exports decreased by 0.2% compared to the same quarter of 2006, but imports decreased by 0.7%. Specifically, the exports and imports of goods decreased, whereas the exports and imports of services increased.

Decrease in the exports of goods was mainly influenced by the decrease in the exports of mineral products and machinery and equipment. Decrease in the imports of machinery and equipment and metals and products thereof influenced the most the decrease in the imports of goods. Deficit of net exports in GDP increased to the level of 8.9%.

On the supply side of the economy, deceleration in the value added growth of manufacturing and real estate, renting and business activities to respectively 4.9% and 0.6%, in addition, decrease in the value added of wholesale and retail trade and transport, storage and communication activities, compared to the 4th quarter of 2006, influenced deceleration in the growth of GDP.

Taxes on products less subsidies grew fast in the 4th quarter, by 13.4% at constant prices compared to the same period in 2006. A large accrual of tobacco excise and fuel excise due to the purchase of tobacco products and fuel by enterprises before the increase in the excise taxes as of 1 January 2008 influenced the fast growth of taxes on products less subsidies.

In the 4th quarter of 2007, the seasonally adjusted GDP at constant prices increased by 0.8% compared to the previous quarter.

Statistics Estonia

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