OREANDA-NEWS. March 18, 2010. Estonia’s gross domestic product grew 2.5% in the fourth quarter of 2009 compared to the third quarter – the first quarter-on-quarter growth since 2007 and a signal that Estonia’s economy is recovering from the downturn, reported the press-centre of Nordea.

Year-on-year, the economy shrank -9.5% in the last quarter, which is a distinctly smaller contraction than the -14.1% for the year.

The GDP figures for 2009 attest to the fact that the Estonian economy has begun slowly returning to growth, a half-year after its European export partners. “We see economic recovery as being powered this year by export. Consumer spending and corporate investments continue to be weak even though the year-on-year numbers show growth due to the low comparative data from last year,” said Nordea Bank’s chief economist Tonu Palm.

For 2010, Nordea forecasts that economic growth will remain at the same level and we expect more positive results only in 2011. “We are not expecting demand to recover quickly in Europe. Estonia has an open economy and responds to growth in foreign demand with a lag time. Above all, pressure on internal demand comes from the weak labour market, low consumer confidence and weak loan growth. For Estonia this points more to slow but balanced growth, which is a good result compared to other European countries. For the next few years, GDP and its primary components will remain under the peak in 2007,” said Palm.

According to Statistics Estonia, Estonian GDP in 2009 dropped 14.1% year-on-year. As with Estonia’s neighbours to the north, the greatest decline occurred in the first half of the year – in the second quarter, Estonia’s GDP dropped 16.1% compared to Q2 2008.