Estonia Economic Forecast

Estonia Economic Outlook

June 26, 2018

The economy lost steam in the first quarter, kicking the year off on a soft note as annual growth slid to the lowest rate since Q4 2016. Growth was weighed down by a weaker external sector, amid evaporating momentum in export-oriented merchandise industries. The slowdown was also affected by a contraction in investment activity in Q1, which swung from healthy growth Q4, against the backdrop of moderating business confidence. Nevertheless, domestic demand was in the driver’s seat in Q1: Household consumption growth ticked up from the previous quarter, as lower inflation boosted retail sales against sustained tightness in the labor market. Meanwhile, S&P Global Ratings confirmed its AA- rating with a stable outlook for Estonia, citing the lowest debt burden in the Eurozone and the government’s strong commitment to maintaining the fiscal discipline.

Estonia Economic Growth

According to FocusEconomics panelists, the economy is projected to expand 3.6% this year, which is down 0.2 percentage points from last month’s forecast. Domestic demand should lead growth, as fixed investment is projected to recover later in the year, supported by capital inflows from EU cohesion funds. At the same time, and despite increasing wages, labor market productivity should improve in the medium term, boding well for private consumption. In 2019, our panelists expect GDP growth to moderate to 3.2%.

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Estonia Facts

ValueChangeDate
Exchange Rate1.170.65 %Jul 11
Stock Market1,259-0.38 %Jul 11

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