Estonia Economic Forecast

Estonia Economic Outlook

November 20, 2018

Incoming data suggests momentum carried over into the third quarter on the heels of a strong second-quarter outturn that was propelled by buoyant domestic demand. Healthy retail sales growth throughout Q3 signaled sustained private consumption dynamics, which were likely bolstered by a broadly stable inflationary environment and a near decade-low unemployment rate. Furthermore, exports growth accelerated in Q3 to a near seven-year high, despite the overall slowdown in EU trade activity, while industrial output growth quickened in Q3 amid slightly improved business sentiment and strong external demand. Looking ahead, available data paints a gloomier picture at the outset of Q4. Business sentiment fell to a near two-year low in October, pointing to a slowdown in economic activity at the end of the year. Similarly, consumer confidence slid into negative territory in the same month.

Estonia Economic Growth

Although growth is set to lose some momentum going forward, it will remain healthy due to robust domestic demand. Economic activity should also benefit from a marked acceleration in fixed investment growth, largely thanks to strong capital inflows from EU cohesion funds, and sustained private consumption growth on the back of tightening of labor market conditions. FocusEconomics panelists see the economy expanding 3.1% in 2019, down 0.1 percentage points from last month’s forecast, and 2.8% in 2020.

Estonia Economy Data

20132014201520162017
Population (million)1.31.31.31.31.3
GDP per capita (EUR)14,34215,02015,49716,08117,572
GDP (EUR bn)18.919.820.321.123.0
Economic Growth (GDP, annual variation in %)1.92.91.72.14.9
Consumption (annual variation in %)3.33.24.44.32.2
Investment (annual variation in %)1.5-8.7-3.0-1.213.1
Industrial Production (annual variation in %)4.44.3-2.22.68.0
Retail Sales (annual variation in %)5.26.78.05.63.1
Unemployment Rate8.67.36.26.85.8
Fiscal Balance (% of GDP)-0.20.70.1-0.3-0.3
Public Debt (% of GDP)10.210.710.09.49.0
Money (annual variation in %)6.79.911.69.55.8
Inflation Rate (CPI, annual variation in %, eop)1.4-0.5-0.92.23.4
Inflation Rate (HICP, annual variation in %)3.20.50.10.83.7
Inflation (PPI, annual variation in %)4.1-1.6-2.0-0.73.6
Policy Interest Rate (%)0.250.050.050.00.0
Exchange Rate (vs USD)1.381.211.091.051.20
Exchange Rate (vs USD, aop)1.331.331.111.111.13
Current Account (% of GDP)0.50.32.01.93.1
Current Account Balance (EUR bn)0.10.10.40.40.7
Trade Balance (EUR billion)-0.9-1.1-0.9-0.8-0.9
Exports (EUR billion)11.011.010.811.211.9
Imports (EUR billion)11.912.111.612.012.8
Exports (annual variation in %)2.00.3-2.23.86.5
Imports (annual variation in %)-1.11.6-3.93.06.7

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Estonia Facts

ValueChangeDate
Exchange Rate1.130.65 %Dec 11
Stock Market1,192-0.38 %Dec 11

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