Estonia Economic Forecast

Estonia Economic Outlook

May 5, 2020

Strict measures imposed to contain the spread of Covid-19 seem to have dealt a blow to the economy at the end of Q1 onwards. Both consumer and business sentiment dived in March and again in April, signaling a severe contraction in private sector activity. Furthermore, industrial output and merchandise exports likely plunged again in the same period, after shrinking in January–February, as foreign demand dried up. Turning to Q2, economic activity appears to be increasingly hampered by lockdown measures after the government announced the state of emergency on 13 March. That said, schools are set to begin opening from 5 May as lockdown measures ease. In further positive news, Fitch Ratings affirmed Estonia's AA credit rating and kept a stable outlook on 30 March, praising the country’s response to the health crisis: On 19 March the government approved a EUR 2.0 billion support package—equivalent to nearly 7.0% of its GDP—for businesses and workers.

Estonia Economic Growth

Our panelists slashed their forecasts again this month and expect the economy to contract sharply this year. Domestically, fixed investment and household spending are set to be particularly hard hit, while a collapse in foreign demand will likely undercut exports. A jump in public spending should soften the overall downturn somewhat, however. FocusEconomics analysts see the economy contracting 6.6% in 2020, which is down 3.3 percentage points from last month’s forecast. In 2021, GDP is seen rebounding and increasing 5.3%.

Estonia Economy Data

2014 2015 2016 2017 2018
Population (million)1.31.31.31.31.3
GDP per capita (EUR)15,25615,80416,48518,05319,739
GDP (EUR bn)20.120.821.723.826.0
Economic Growth (GDP, annual variation in %)2.91.82.65.74.8
Consumption (annual variation in %)3.04.94.52.74.2
Investment (annual variation in %)-2.6-3.20.812.51.7
Industrial Production (annual variation in %)3.90.33.44.04.1
Retail Sales (annual variation in %)6.78.05.63.61.0
Unemployment Rate-  -  -  -  -  
Fiscal Balance (% of GDP)0.70.1-0.5-0.8-0.6
Public Debt (% of GDP)10.510.010.29.38.4
Money (annual variation in %)9.911.69.55.810.5
Inflation Rate (CPI, annual variation in %, eop)-0.5-0.92.23.43.4
Inflation Rate (HICP, annual variation in %)0.50.10.83.73.4
Inflation (PPI, annual variation in %)-1.6-2.0-0.73.62.6
Policy Interest Rate (%)-  -  -  -  -  
Exchange Rate (vs USD)-  -  -  -  -  
Exchange Rate (vs USD, aop)1.331.111.111.131.18
Current Account (% of GDP)0.81.81.72.72.0
Current Account Balance (EUR bn)0.20.40.40.60.5
Trade Balance (EUR billion)-1.0-0.9-0.8-0.8-1.0
Exports (EUR billion)11.010.711.312.012.7
Imports (EUR billion)12.011.612.012.913.7
Exports (annual variation in %)0.5-3.05.66.55.8
Imports (annual variation in %)1.1-3.74.16.86.6

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Estonia Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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