OREANDA-NEWS. June 08, 2012. Somewhat surprisingly, the acceleration of the growth in domestic demand did not increase the current account deficit. Similarly to the beginning of last year, the current account showed a small deficit this year. The current account deficit amounted to 2.2% of the GDP in the first quarter, standing lower than a year ago.

Goods export slowed down and import gained momentum, with a bulk of the deterioration in the balance of goods balanced out by a greater surplus of the services account. Unlike the export of goods, the speed of growth in services exceeded that of the second half of last year. The decrease in the surplus of goods and services was thus minimal. This means that, in the first quarter of the year, domestic demand grew more or less on par with savings.

The decrease in the current account deficit was conditioned by a decline in the profitability of foreign investments made in Estonia, as the direct investment income dropped by one-fifth during the year.

Debt cash flows dominated in both capital outflow and capital inflow. The external debt of Estonia grew by 2% in the quarter, amounting to 97% of the GDP. The debt investments of Estonian residents were greater still, with the net debt thus continuing to reduce. By the end of the quarter, the net debt amounted to 5% of the GDP.