Estonia's economic growth driven by industrial sector

Estonia's gross domestic product expanded by approximately 2% in the second quarter of this year, a slightly faster pace than at the start of the year, according to preliminary estimates from Statistics Estonia. This marks the fifth consecutive quarter of economic growth.

Robert Müürsepp, head of the national accounts group at Statistics Estonia, noted that information and communication, manufacturing and several other activities are showing good turnover growth. Final conclusions will be possible after the publication of revised data, when value added by sectors is analysed in detail, but the first signals for these areas are rather positive.

The recovery is tangible at some industrial companies. Matek, a producer of wooden modular buildings, has nearly doubled its production volumes over the year, though it has not yet returned to pre-crisis levels. Chairman of the management board Sven Mats explained that while production volumes have increased, the company's business structure has changed significantly, as demand for housing across Europe has not yet recovered. The growth has been made possible largely through serious adaptation.

Müürsepp highlighted real estate as one of the weaker sectors, but brokers report neither a sharp rise nor a fresh decline. The current pace of price increases is in line with normal market dynamics, according to Ingmar Saksing, board member of LVM Kinnisvara. He described the market as stable, with prices rising around 4–5%, though the overall cost of housing and all expenses remains higher. Property has not become cheaper, but also not more expensive.

In the trade sector, a strong start to the year gave way to more modest results in the second quarter, with the main decline seen in sales of industrial goods. Kristjan Anderson, head of commercial accounting at Selver, said the second quarter marked a symbolic four years of uninterrupted decline in sales volumes. On a positive note, prices in June fell by more than 1.5% year-on-year, but this has not yet changed consumer behaviour. Food sales volumes are likely to be around 1% lower than a year earlier.

Statistics Estonia will publish the revised data at the end of August.