Economy

Estonian economy contracts 6.9% on year in Q2

According to Statistics Estonia, in the 2nd quarter of 2020, the gross domestic product (GDP) fell by 6.9% compared to the 2nd quarter of 2019. The GDP at current prices was 6.4 billion euros.

According to Robert Müürsepp, leading analyst at Statistics Estonia, most of the economic activities experienced economic downturn due to the emergency situation. “Accommodation and food service activities, which were hit most severely by the emergency situation, fell by 58%, manufacturing by 19%, trade by 11%, transport by 8%, real estate activities by 13% and professional, scientific and technical activities by 10%. The only activities that continued to show significant growth were construction by 12% and information and communication by 8%,” said Müürsepp.
Compared to the 2nd quarter of 2019, also tax receipts decreased, but at a slower pace than the overall downturn of the economy.

Household consumption fell by 8.7%. Only lifestyle-related expenditure on food and communication services grew. Expenditure in all other commodity groups fell: in particular, fewer clothing and footwear items were purchased and transport and various services were not used.

Investments declined by 15.4%. The most significant decline was recorded in investments by enterprises into buildings and structures (35.2%) and transport equipment (62.5%). The decrease was softened to some extent by an increase in investments of the government sector into buildings and structures (7.7%) and households’ investments into dwellings (3.1%).

The consumption of the government sector increased by 3.7%, mostly due to higher health care spending related to the coronavirus (7.9%).

In the second quarter, exports dropped by 19% and imports by 22%. The reason for this was the overall decline in freight and transport services as well as the shrinking of travel services. In Estonia, more services and goods are exported than imported, which has resulted in a record surplus of net exports – 6.2% of GDP.

Compared to the 1st quarter of 2020, the seasonally adjusted GDP fell by 5.6% and compared to the 2nd quarter of 2019, by 6.5%.

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