Estonia’s current account had a deficit of 24 million euros in the second quarter of 2013, equaling 0.5 percent of gross domestic product, compared with a gap of 3 percent of GDP in the second quarter of 2012, figures published by the central bank show.
As a result of weak external demand the pace of growth in the export of goods has been uneven in the past two years, moving up and down between 2 and ten percent in different quarters. Also in the most recent quarters there were no categories of goods or target markets that were characterized by constant sales successs, Bank of Estonia economist Andres Saarniit said in his commentary.
Of goods 4 percent more was exported in the second quarter than during the same period a year ago. The export of services decreased and the import of services moved up. The main reasons for that, according to Saarniit, were a reduction in the sale of transport services compared with last year and an increase by one-tenth in the import of services.
All told, there was a smaller surplus in the goods and services account than in the second quarter of 2012. The surplus contracted to 2 percent of GDP, indicating stronger domestic demand.
“Given the weak external demand this is good news from the viewpoint of economic growth in the near term. Unfortunately, strengthening of domestic demand took place mainly as a result of growth in private consumption, not investments,” said Saarniit.
Income earned by Estonian residents abroad increased year on year while income earned by foreigners in Estonia declined.
“Net outflow of income equaled 3.2 percent of GDP in the second quarter of 2013, at the same time a year ago this indicator was 8.1 percent. The reduction in the deficit of the income account made up for the reduction in the surpluses of the goods and services account and transfers account alike,” the analyst said.
The latest estimate by the Bank of Estonia puts the size of the full year current account deficit at about one percent of GDP. The current account data for the first half of the year back up that forecast.
Source: Estonian Review / BNS
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