Tuesday, August 28, 2007

Fresh look at Estonia's Q2 GDP

Catalan economist Edward Hugh has an interesting blogpost about Estonian 2Q economic growth:
BONOBO LAND: Is Estonia Heading For A Soft Landing?
Instead of comparing the Q2 real GDP to that of Q2 of 2006, which gives a healthy growth of 7,3% "consistent with the soft landing scenario" as Estonian Central Bank notes, he compares seasonally adjusted GDP to the previous quarter:

Here it becomes apparent that the Estonian economy probably peaked somewhere between the 3rd quarter of 2005 and the 1st quarter of 2006. But what stands out even more is what happened in Q2 2007 (with a quarterly growth rate of only 0.2% according to my calculations). This is almost - in Baltic economy terms - to grind to a halt. Indeed since the Q1 2007 figures are seasonally corrected, and it is not clear to what extent the "correction" being used is valid during such a sudden slowdown, the deceleration may be more equally distributed over the two quarters than it seems, but still, the drop is real and evident enough.
It is a valid note that Estonian Statistics office haven't released their seasonally adjusted figures yet (they will be available on Sep 10th) so Edward has done the seasonal adjustment himself. However, if his calculations are correct the economic growth in Q2 2007 was worst quarterly growth since 1999.

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