Estonia 2011 growth tops EU with revised 7.6%

(TALLINN) - Estonia had the highest economic growth in the 27-member European Union in 2011 with output rising by 7.6 percent from the level in 2010, official data showed on Friday.

The data revised output up by 0.1 percent, but the latest figures also pointed to quarterly contraction at the end of the year.

The Baltic nation of 1.3 million is expected to top the eurozone's growth charts this year with a 1.2-percent expansion as the 17-member currency bloc's debt crisis takes its toll, according to a European Commission forecast in February.

As the country's main trade partners were battered by the eurozone debt crisis, Estonia saw gross domestic product (GDP) growth slow to 4.5 percent in the fourth quarter of 2011, Statistics Estonia said on a 12-month basis.

Compared to the third quarter of 2011, seasonally and working-day adjusted GDP shrank by 0.2 percent in the fourth quarter.

"In the first three quarters of 2011, GDP growth was mainly driven by manufacturing. Construction, information and communication activities began contributing the most to economic growth as of the second half of 2011," Tonu Mertsina of Statistics Estonia told AFP.

"Domestic demand increased by 11 percent in 2011, mainly due to the fast growth of gross capital formation, especially due to business-sector investments in transport equipment and machinery," he added.

Estonia embraced the free market after restoring its independence from the crumbling Soviet Union in August 1991.

But after years of growth, the Estonian economy was hit hardly by global financial crisis shrinking by 14.3 percent in 2009.

In a bid to hasten recovery, its centre-right government -- known for some of Europe's most conservative fiscal policies even before the crisis -- launched an austerity drive.

Growth returned in 2010, when the economy expanded by 2.3 percent.

An ex-Soviet state, Estonia joined EU in 2004 and the eurozone on January 1, 2011, becoming the 17th EU member to switch to the shared currency and the third from the ex-communist bloc.