The Estonian economy contracted -15.1% year-on-year in Q1 2009, with low domestic and foreign demand depressing overall output in the Baltic state, according to the statistics office.

Estonia , like its neighbours Latvia and Lithuania, has been hit by its worst post-Soviet recession because of the global credit crunch and the collapse of a real estate price boom.

Their plight has hurt Nordic banks, many of which had expanded their loan portfolios and helped inflate prices and overheat the small open economies.

Estonia’s statistics office said the output drop in the first quarter, slightly less than a 15.6% flash estimate released in May, reflected a drop in activity in manufacturing, construction, retail and wholesale trade and transport, storage and communications.

It said: ‘Domestic demand decreased by 21.4% compared to the first quarter of the previous year above all due to the substantial decrease in household final consumption expenditures, gross fixed capital formation and change in inventories.’

The Estonian central bank’s spring forecast said that in a worst-case scenario, the economy would contract -15.3% over 2009 as a whole.


Construction of new-build decreases by half

According to the National Statistics Institute (NSI), construction of new residential property in Q1 2009 decreased by -42.8% compared to the previous quarter, and was -12.9% lower than Q1 2008.

A total of 3897 new flats in 547 new buildings were developed in Q1 of 2009, the majority of which in Varna and Bourgas, followed by Plovdiv and Sofia. Not a single building was completed in Kyustendil or Stara Zagora, according to the NSI.

NSI statistics also showed that the average new construction flat has been reduced in size from 78.3sqm down to 75.5sqm.