Estonia Avoids Recession as Economic Growth Misses EstimatesOtt Ummelas
Estonia’s economy grew less than analysts predicted in the second quarter, avoiding a recession.
Gross domestic product rose 1.3 percent from a year earlier, compared with 1.1 percent in the previous three months, the statistics office in the capital, Tallinn, said today on its website. That was less than all four forecasts in a Bloomberg survey, which had a median estimate of 2.6 percent. GDP grew a seasonally adjusted 0.1 percent from the first quarter after shrinking 1 percent in the January-March period.
The $22-billion economy of the newest euro member is lagging behind expansion in the neighboring Baltic countries of Latvia and Lithuania as public construction shrinks after benefiting from the United Nations’ carbon quota sales in the past two years. Weak export demand from Finland, Sweden and Russia may cut economic growth to 2 percent this year from 3.2 percent in 2012, the central bank repeated in an e-mail today.
“Weak domestic investment is caused mainly by the termination of the public investment program,” Violeta Klyviene, senior Baltic economist at Danske Bank A/S, said by e-mail. “The private sector continues the deleveraging process. The weak recovery in investment demand is reflected in still high uncertainty about external demand.”
With no outstanding bonds, investors speculate on Estonia’s creditworthiness by trading credit-default swaps, whose cost for five years was little changed at 69 basis points at 2:06 p.m. in Tallinn, compared with 737 in 2009, according to data compiled by Bloomberg.
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.
Finland’s working-day adjusted GDP shrank 4.2 percent in April, the most since December 2009, and Sweden’s economy shrank 0.1 percent in the second quarter from the previous three months. Russia’s economic growth unexpectedly slowed in the second quarter to 1.2 percent from a year earlier.