Growth industry

In my post on Estonia’s third quarter gross domestic product (GDP) report last month, I took the glass-half-full approach and ventured that the numbers suggested the Estonian economy had turned the corner. The revised figures, just released by Statistics Estonia, show that the corner was not as sharp as we thought.

The original numbers had the Estonian economy contracting by 15.3% in the quarter ended September 30th; the revision shows that actual GDP contraction was 15.6%. This still represents an improvement over the second quarter, during which economic output fell 16.1%, but one that is less pronounced than the preliminary numbers suggested.

The official GDP revision also included some eye-popping numbers on the performance of individual components of the Estonian economy. The only industry that grew meaningfully in the third quarter was fishing.

The biggest loser was construction, where economic activity fell by a whopping 32%. No wonder so many Estonian construction workers have gone to Helsinki looking for work.

Economic activity at Keskturg (Tallinn Central Market)

The official estimate of Estonia’s third-quarter gross domestic product (GDP) was released today by Statistics Estonia. The number is grim, but if you squint and tilt your head a bit you might—just possibly—be able to see the glass as half-full.

The total value of all goods and services produced by Estonia in the July-through-September period this year declined by 15.3% compared to what was produced in the comparable period of 2008.

To place this in a regional perspective, Estonia’s GDP collapsed more than did Lithuania’s (down 14.3%), but it wasn’t quite as bad as Latvia’s (down 18.4%).

SEB economist Mikael Johansson (quoted in this Dow Jones wire report) sees in the 3rd quarter data a sign that the Estonian economy has stabilized. His cautious optimism is supported by this Statistics Estonia chart:

The bars show the ugly quarterly GDP declines, stretching back nearly two years. But optimists will want to focus on the pink line, which shows that the rate of decline in Estonian exports bottomed out in the 1st quarter and that exports have been shrinking more slowly over the past 6 months; and the red line, which suggests a bottoming of industrial decline in the 2nd quarter.

One footnote: Statistics Estonia notes that the -15.3% GDP figure is a preliminary, “flash” estimate; a more accurate 3rd quarter GDP estimate will be released on the 9th of December. Mark your calendar.