Swedbank: Economy surprised on the upside at the end of the year
- In the fourth quarter of 2024, Estonian GDP rose by 1.2% y/y in real terms (seasonally non-adjusted) and 0.7% compared to the previous quarter (seasonally and working day adjusted), according to the updated estimate of Statistics Estonia. The growth was stronger than expected. Statical Office also revised up previous quarters in 2024.
- In 2024, Estonian economy contracted 0.3% y/y in real terms, while increased 3.5% in nominal terms.
- Despite still very weak consumer confidence, private consumption turned to growth at the end of the year increasing by 1.2% y/y. Strong growth in private consumption was largely supported by car purchases at the end of last year due to the car tax from 2025. Tax increases are hampering households’ purchasing power. However, falling interest rates continue to alleviate obligations for households with loans. Swedbank card payments suggest that private consumption continued to increase in January.
- Export of goods turned to growth after eight consecutive quarters of decline as foreign demand is improving. In the fourth quarter, export of goods increased by 4.9% y/y, while export of services rose by 0.5% y/y. Imports increased by 3.5% y/y making net exports to contribute negatively to the GDP growth.
- Large negative contribution to the GDP came from investments as non-financial corporations’, government and also household investments declined.
- While government fiscal consolidation will hold back economic expansion this year, growth will be supported by falling interest rates. Foreign demand will continue to improve, but risks have recently increased. We forecast 1.5% GDP growth in 2025.
Sildid:
Accor,
consumption,
economy,
Estonia,
Estonian,
export,
House,
import,
interest rate,
purchasing power,
Rovin,
Swedbank
