According to Statistics Estonia, in 2017, the gross domestic product (GDP) of Estonia increased 4.9% compared to 2016. In the 4th quarter of 2017, the Estonian economy grew by 5.0% compared to the 4th quarter of 2016.
In 2017, the GDP at current prices was 23 billion euros.
The economic growth in 2017 was the fastest in five years. Main contributors to the broad-based growth were construction, information and communication, and professional, scientific and technical activities. The contribution of manufacturing grew gradually throughout the year. No economic activity had a strong negative impact on the economic growth. Also agriculture, which had been hindering the economic growth since the 2nd quarter of 2016, began to grow in the second half of 2017. At the same time, trade, which had driven economic growth in 2016, became the biggest drawback to the growth in the second half of 2017.
Supported by programming and software development, the value added of information and communication grew by 15.6%. The value added of professional, scientific and technical activities grew at almost the same rate – 13.9%. The value added of Estonia’s largest economic activity, manufacturing, grew despite modest results in the 2nd quarter at the fastest pace in three years – by 3.9%. The value added of trade, which went into decline in the second half of the year, grew only by 1.8%.
Net taxes on products did not grow significantly in 2017. Due to an increase in tax revenue, their growth at current prices was 5.4%, but the growth corrected for inflation was only 0.1%.
Despite the modest increase in the middle of the year, exports of goods and services grew 2.9% in 2017. The main contributor was the still solid growth in the exports of services, which reached 6.2%. This was mostly due to the exports of transport and computer services. The main hindrance to the exports of goods was the decline in the exports of electronic equipment. The imports of goods and services grew by 3.5%. The most significant contributor to this was the imports of vehicles. Net exports reached 980 million euros in 2017, which is 4.3% of the GDP. This is the largest share in the GDP in six years.
The growth in domestic demand accelerated for the second consecutive year, reaching 4.2%. This was led by the growth in investments (13.1%), which had been in decline for the past three years. Compared to 2016, investments grew in almost every sector and economic activity. The biggest impact on the GDP came from the investments in machinery and equipment by the government sector (0.4%), and in other buildings and structures by the government sector (0.5%) and nonfinancial enterprises (0.4%). Final consumption of households grew by 2.0% in 2017. The final consumption expenditures of the government sector grew by 0.8%, supported by the EU presidency.
In 2017, the growth of the GDP surpassed the growth of the number of hours worked and persons employed for the second consecutive year. As a result, productivity per hour worked grew by 1.9% and per person employed by 2.1%. While at current prices, the increase in labour costs slowed down a bit, unit labour cost grew by 3.6%.
In the 4th quarter of 2017, the Estonian GDP at current prices was 6.1 billion euros.
The main contributors to the economic growth were information and communication, professional, scientific and technical activities, and manufacturing. Energy and transportation also had a significant positive impact. The main hindrance to the economic growth were wholesale and retail trade, and real estate activities.
Domestic demand grew by 4.5% in the 4th quarter. The growth in investments slowed down significantly to 5.8% compared to the same period of the previous year. Main contributors to the growth were the investments in buildings and structures and in telecommunication equipment by nonfinancial enterprises, and investments in machinery and equipment and in defensive structures by the government sector. The final consumption of households grew by 2.6%.
The exports of goods and services grew by 3.4% compared to the same period of the previous year. The main contributors to the growth were the exports of chemicals and chemical products and electrical equipment. The same goods also contributed to the growth of the imports of goods and services, which grew 4.2%. Also the imports of vehicles increased significantly. The share of net exports in the GDP was 3.6%.
Both the number of hours worked and persons employed grew at the fastest pace in six years. As a result, the productivity per hour worked grew only by 0.5%, and the productivity per person employed fell by 0.4%. Unit labour cost grew by 3.7% in the final quarter of the year.