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Estonia’s economy grew more than expected, by 5.4%, in the first quarter of 2021

According to Statistics Estonia, in the first quarter of 2021, the gross domestic product (GDP) grew by 5.4% year on year. The GDP at current prices was 6.9 billion euros.

The economic activities that contributed the most to economic growth were trade, information and communications, financial and insurance activities, according to Statistics Estonia. The economy was also boosted by healthcare, in connection with coronavirus-related expenditures, and the energy sector, which benefited from the cold winter.

Of the larger economic activities, manufacturing had a negative impact on economic growth along with the construction sector, which felt the impact of the pandemic with a delay. Due to restrictions on activities, accommodation and food service activities also remained in decline.

Private consumption has now been declining for over a year, shrinking by 3.3% in the first quarter. Aside from travel-related expenditures, other consumption showed modest growth. Similarly to previous periods, expenditures rose on communication, home furnishings and supplies, which are connected with the stay-at-home life style. Expenditures on eating out, leisure, transport, clothing and footwear continued to decrease. Expenditures on healthcare increased, also driving growth in general government consumption.

Investments were characterised by broad-based growth. There were increases in both, households’ investments in dwellings (by 13%), and enterprises’ investments in transportation equipment (by 71%), buildings and infrastructure (by 7%) and machinery and equipment (by 5%).

Foreign trade that started growing at the end of last year continued in the same direction. Exports of goods increased by 5% and imports by 12%. The trade growth was supported by the imports and exports of wood products, electronics and motor vehicles. Among services, computer services gave the biggest positive contribution. Foreign trade in travel services continued to decline, while transport services are gradually recovering.

Compared to the fourth quarter of 2020, the seasonally adjusted GDP grew by 4.8%, and compared to the first quarter of 2020, by 5.0%.

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