Andres Saarniit, Adviser of the Economics Department of Eesti Pank

According to the flash estimate of the Statistical Office of Estonia the gross domestic product grew by 6.4 per cent in the third quarter of 2007. The current change in economic growth is in line with the forecast of Eesti Pank according to which the average annual growth rate of GDP is going to be 7.3 per cent.

The slowdown of economic growth was presumably conditioned by a decrease in domestic demand. This is also reflected in the current account flash estimate. The growth rate of goods exports has remained at its previous level. Real GDP growth, i.e., increase in the total volume of goods and services produced in economy as measured in constant prices has slowed down as compared to the first half of the year. Nominal GDP growth, i.e., increase in goods and services as measured in current prices continues to be high since changes in economy affect wages and salaries and prices with a lag. Therefore, in the third quarter of 2007 wages and salaries and mainly services prices were still affected by the strong domestic demand of the previous year.