Estonia’s GDP dropped 2.4% year-on-year in Q1 2024 in real terms (non-adjusted), according to Statistics Estonia. In quarter-on-quarter comparison, GDP continued to contract at the start of the year, falling by 0.5% (swda) in the first quarter. Nominal GDP growth continued to slow and was only 1.1% y/y in Q1 2024, the weakest pace after the GFC (excl. 2020).
The recession was broad-based. The value-added fell in thirteen out of twenty activities. The largest negative impact came from manufacturing, energy production, professional activities, and wholesale and retail trade. The increase in the value added of agriculture, real estate activities and public administration gave strong positive contribution but the first two were affected by a low base from a year ago.
Insufficient demand limits business activity of more than three quarters of the Estonia’s manufacturing enterprises. The assessment of order-book levels inched further down in May. Although foreign demand should gradually improve this year, Swedish and Finnish construction sector doldrum will continue to hamper Estonian manufacturing.
Household confidence should improve this year but is expected to remain below long-term average. Swedbank card payments indicate that the recovery of consumption is bumpy.
