Estonia’s economy slowed more than economists estimated in the first quarter to the weakest pace in three years as fewer public projects undercut the construction industry in the newest euro member.
Gross domestic product rose 1 percent from a year earlier, compared with 3.7 percent in the previous three months, the statistics office, based in the capital, Tallinn, said today on its website. That’s less than the 3.6 percent median estimate in a Bloomberg survey of five economists. GDP shrank a seasonally adjusted 1 percent from the fourth quarter.
Estonia, which adopted the euro in 2011, has weathered Europe’s debt crisis as Swedish and Finnish demand helped its economy recover from a 20 percent contraction in the wake of Lehman Brothers Holdings Inc.’s 2008 demise. Today’s data show the economy expanding at the slowest rate since the Baltic nation exited a recession in April-June of 2010 after projects financed by sales of United Nations’ carbon quotas finished.
“The ending of the carbon emissions’ funds seems to have had a bigger effect on economic growth than presumed,” Ruta Arumae, a Tallinn-based economist with SEB AB, said by e-mail. “We know the biggest engines, industry and retail sales, started the year modestly. Growth should accelerate somewhat in the second quarter” because of higher excise-tax receipts and quicker consumption growth.
Re-exports of fuel excluded from monthly trade data helped boost foreign goods sales by 13 percent from a year earlier in the first quarter, adjusted for inflation, according to the statistics office.
The central bank reiterated this year’s 3 percent economic-growth forecast today. That would represent a slowdown from 2012, when it expanded 3.2 percent, the European Union’s third-fastest pace.
“In the first quarter, economic conditions of our main trading partners -– Sweden, Finland, Russia and other Baltic countries -– had deteriorated,” Tonu Mertsina, chief analyst at Swedbank AB in Tallinn, said in an e-mailed note. “Economic growth in Estonia will be modest in the next few months due to weak foreign demand.”