According to Statistics Estonia, in the second quarter of 2024, the economy showed several signs of improvement: the gross domestic product (GDP) decreased by 1% compared with the same period of 2023, which is less than in previous quarters.
Robert Müürsepp, team lead of national accounts at Statistics Estonia, pointed out that in contrast to the previous quarters, the economy showed several signs of improvement in the second quarter.
“Of the major activities, only trade and construction had a strong negative impact on the economy during this period. The contribution of manufacturing remained unchanged in the second quarters of last and this year and was close to zero,” Müürsepp added. According to him, as a positive contributor, mainly real estate activities stood out.
Several sectors are helping the economy recover
Value added declined at the slowest pace of the last year and a half, falling by 1.7% in the second quarter. Value added is the total output of enterprises after taking away the value of inputs used for production. The slowdown was mainly due to a slight improvement in the performance of the non-financial corporations sector where value added fell by 2.2%. The value added of the financial sector decreased by 3.4%.
The GDP at current prices amounted to €9.8 billion.
Source: Statistics Estonia
Similarly to the previous two quarters, the economy again clearly benefited from the continued rise in tax revenue. There were increased receipts from both value added tax and several excise duties.
Private consumption, however, continued in the pace of the first quarter, declining by 1.3%. The biggest drop was seen in households’ expenditures on clothing and footwear. Expenditures on transport and on miscellaneous goods and services also decreased significantly. Spending on financial and insurance services, food and accommodation and housing rose slightly.
Source: Statistics Estonia
Government consumption increased by 1.1%. Wage growth in the government sector has slowed down compared with the previous year, but it is still the main driver of growth in this sector’s value added, led by healthcare and education.
Investments were up by 7.9% in the second quarter. The main positive contribution came from non-financial corporations’ investments in other buildings and structures, which increased by 64.9%. Households’ investments in dwellings – down by 19.2% – again had the biggest negative impact.
Foreign trade shows signs of improvement
The second quarter also saw an improvement in foreign trade. Both exports and imports fell once again, but now only by 1.6% and 0.3%, respectively. Viewed separately, trade in goods declined by a further few percent in each direction. Exports of services, however, showed a modest upturn and imports of services continued to grow, as in the first quarter. Net exports remained positive for the third quarter in a row.
The seasonally and working-day adjusted GDP remained unchanged compared with the first quarter of 2024 and was down by 1.3% from the second quarter of 2023.
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