According to Statistics Estonia, the gross domestic product (GDP) decreased by 2.7 percent in the fourth quarter of last year compared to the same period in 2022, in current prices, GDP amounted to 9.9 billion euros in the last quarter – in total, Estonia’s GDP fell by three percent in 2023, in current prices, GDP was 37.7 billion euros.
According to Robert Müürsepa, head of the national economy accounting team at Statistics Estonia, a broad-based economic recession remained in Estonia throughout the year. “There were few areas of activity that made a positive contribution, and areas of activity that played a greater role in the economy rather experienced a decline. In the calculation of the year, the largest positive contributions came from trade and real estate activities, while the negative ones came from the information and communication sector. However, the latter already had a positive effect in the second half of the year,” explained Müürsepp.
In the fourth quarter, the fields of activity with the largest positive contribution were agriculture, forestry and fishing, and trade. Energy, processing industry, professional, scientific and technical activities, and transportation and warehousing clearly remained in decline. The contribution of the construction sector was also negative, continuing the trend of one and a half years.
The mason said that there has not been such a broad economic recession in Estonia since the bursting of the real estate bubble. “Even in the year of the corona crisis, there were more areas of activity with a positive impact than in the year that ended in 2023. However, it is worth mentioning that in current prices both the total output of the economy and the added value continued to grow in the last year. The reason for the weak real results in the last two years has been the rapid increase in prices, which has left its mark on all areas of activity,” stated Müürsepp.
At the end of the year, the price increase slowed down, which led to a reversal of the trend of several GDP components, and indicators that had decreased during the year returned to growth at the end of the period. The added value of non-financial sector companies fell by 5.9 percent in the fourth quarter, while the financial sector already showed an increase of 0.5 percent. In the year as a whole, the sectors fell by 4.4 and 5.2 percent, respectively.
The weakest result of the government sector was in the first quarter, when the added value grew by only 1.3 percent. It increased by 4.4 percent in the fourth quarter and by 3.5 percent over the year. The biggest change occurred in tax collection. In the first three quarters, net product taxes were in a clear decline, but in the fourth quarter they increased by as much as 6.3 percent. This resulted in an annual decline of just 1.9 percent.
In private consumption, the fourth quarter also brought a turnaround, when the year-long decline was replaced by 0.5 percent growth. However, private consumption decreased by 1.5 percent over the year. People’s spending on other goods and services, home furnishings and leisure time decreased the most in the past year. However, expenditures on communications, housing, restaurants and hotels grew the most. In the fourth quarter, spending on education and transportation also showed significant growth. As a whole, household spending on goods decreased by 3.1 percent in 2023. Expenditure on services remained more or less at the previous year’s level, growing by 0.3 percent.
The final consumption of the government sector, which started to decrease in the third quarter, turned around again in the fourth quarter and increased by 2 percent. In the past year, the consumption of the government sector increased by a total of 0.9 percent.
Investments had a very volatile year in 2023, but in the fourth quarter they remained more or less at the same level as last year, falling 0.4 percent. Government sector investments in machinery and equipment and defense fixed assets stood out as a positive contribution with +47.6 percent, as well as investments in other buildings and facilities with +15.5 percent. On the negative side, however, the investments of non-financial companies in the same asset classes stood out with -13.8 and -6 percent, respectively. Total investments decreased by 3.4 percent over the year. The largest positive contribution was made by investments in residential premises, increasing by 14.1 percent. The most significant negative contribution came from means of transport, where investments fell by 41.1 percent.
The difficult course of foreign trade continued in the fourth quarter as well, when the total export of goods and services decreased by 9 percent and import by 6.6 percent. The export of goods decreased by 13.5 percent and the import by 10.1 percent. It was most affected by electricity, wood processing and chemical products. Services fared somewhat better: services exports decreased by only 0.7 percent and imports increased by 2.9 percent. In particular, the economic activity on the service side was slowed down by the decline in the transport sector, the main influence of which was the railway transport service. At the end of 2022, foreign trade accounted for 86 percent of GDP, while at the end of last year it decreased to 78 percent.
Seasonally and working day-adjusted GDP decreased by 0.7 percent compared to the third quarter and by 2.5 percent compared to the fourth quarter of last year.
Based on the data of the national economy accounts, you can find out how the Estonian economy is doing. Economic growth and decline are mainly measured on the basis of GDP and gross national income. The higher these indicators are, the better the economic well-being of the country and the people living here.
The statistical work “Accounting of the National Economy” is carried out by the Statistics Office on the order of the Ministry of Finance in order to find out how the Estonian economy is doing.
