Estonian GDP Beats Estimates to Grow 3.7% in Fourth Quarter

Estonia’s economy unexpectedly kept its pace of expansion in the fourth quarter after renewed Nordic export demand.

Gross domestic product rose 3.7 percent from a year earlier, compared with a 3.5 percent increase in the third quarter, the statistics office, based in the capital, Tallinn, said today on its website. That beat the 3 percent median estimate in a Bloomberg survey of five analysts. GDP grew a seasonally adjusted 0.9 percent from the previous three months.

The Baltic economy is set for the euro-area’s fastest growth this year after outpacing the rest of the European Union in 2011, Prime Minister Andrus Ansip told Bloomberg in an interview last month. GDP may rise about 3 percent in 2013 following a 2.5 percent to 3 percent expansion last year, he said.

Growth “appears to have been driven by the strong recovery in the production of electronics,” Liza Ermolenko, a London-based economist with Capital Economics Ltd., said by e-mail. “As we expect the euro-zone to remain in recession over the coming quarters, it’s unlikely that external demand will strengthen further.”

As Europe’s debt crisis sapped Nordic export demand, the $22 billion Baltic economy has been buffeted by rising corporate investment and public-sector construction financed by sales of spare United Nations carbon quotas. GDP may rise 2.5 percent this year, Ermolenko estimates.

Estonia, which adopted the euro two years ago, has no outstanding bonds, so investors speculate on its creditworthiness by trading credit-default swaps. Their cost for five years has plummeted to 61 basis points, the fifth-lowest in the euro area, from a peak of 737 in 2009, according to data compiled by Bloomberg.