- Growth stunted by weaker export demand for manufacturing
- External demand to improve in 2016, Finance Ministry says
Estonia’s economy grew at the slowest pace in more than two years as declining export demand from Nordic countries and Russia eroded manufacturing output.
Gross domestic product rose 0.5 percent from a year earlier in the third quarter, the least since the second three months of 2013, the statistics office in the capital, Tallinn, said Wednesday on its website. GDP shrank 0.5 percent from the previous three months, the second quarterly contraction in three.
Recessions in export markets such as Finland and Russia, and a growing shortage of skilled labor, have crimped economic expansion in Estonia, a European Union and euro-region member. Swedbank AB, the Baltic region’s largest lender, trimmed Estonia’s 2015 growth forecast to 1.6 percent this week, citing weaker output of electronics, mainly produced by the local subsidiary of Stockholm-based Ericsson AB.
Third-quarter growth was weaker than expected because “recession in Russia is deepening” and “the Finnish economy is still in crisis,” Liis Elmik, a Tallinn-based economist at Swedbank, said in an e-mailed note.
The Finance Ministry said the export environment should improve next year as the biggest global economies implement measures to stimulate demand. Fast wage growth hasn’t curbed Estonian companies’ price competitiveness because exports had until recently been growing quicker than imports in the nation’s trading partners, it said in an e-mailed statement.