Estonia Economic Outlook
A digital leader in Europe:
Estonia, with a GDP of around $40 billion, has one of the most advanced digital economies in the world. The country is known for its highly developed e-governance system and strong tech sector, which has fostered innovation and entrepreneurship. Growth has been strong in recent years, although Estonia fell into recession in 2023 due to high inflation, weak external demand, and rising interest rates. The economy remains highly dependent on exports, making it vulnerable to European economic slowdowns.
Key industries and trade:Estonia’s economy is export-driven, with key sectors including information technology, electronics manufacturing, and wood processing. The country has a thriving startup ecosystem, producing global tech firms like Skype, Bolt, and Wise. Estonia is also one of the most energy-independent countries in the EU, thanks to its large oil shale reserves, though it has been shifting toward renewables. Trade is heavily oriented toward the EU and Nordic countries, with Finland and Sweden among its top partners.
Challenges:Estonia faces several economic challenges, including an aging population, labor shortages, and inflation. Inflation was among the highest in the eurozone in 2022, exceeding 20% at its peak, before easing in 2023. The country also has a small domestic market, limiting economies of scale. While Estonia is a leader in digital transformation, it must continue investing in infrastructure and innovation to sustain long-term competitiveness.
Estonia's Macroeconomic Analysis:
Nominal GDP of USD 42.7 billion in 2024.
Nominal GDP of USD 41.3 billion in 2023.
Nominal GDP of USD 42.7 billion in 2024.
GDP per capita of USD 31,175 compared to the global average of USD 10,589.
GDP per capita of USD 30,137 compared to the global average of USD 10,589.
GDP per capita of USD 31,312 compared to the global average of USD 10,589.
Average real GDP growth of 2% over the last decade.
Average real GDP growth of 2% over the last decade.
Average real GDP growth of 2% over the last decade.
Sector Analysis
In 2022, services accounted for 63.8% of overall GDP, manufacturing 12.7%, other industrial activity 21.3%, and agriculture 2.2%. Looking at GDP by expenditure, private consumption accounted for 53.0% of GDP in 2023, government consumption 20.9%, fixed investment 26.7%, and net exports -0.6%.International trade
In 2023, manufactured products made up 66.1% of total merchandise exports, mineral fuels 8.4%, food 11.7%, ores and metals 2.1% and agricultural raw materials 6.6%, with other categories accounting for 5.1% of the total. In the same period, manufactured products made up 64.1% of total merchandise imports, mineral fuels 10.8%, food 12.6%, ores and metals 1.5% and agricultural raw materials 2.4%, with other goods accounting for 8.6% of the total. Total exports were worth USD 19.10 billion in 2024, while total imports were USD 22 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 2.0% in the decade to 2024. To read more about GDP growth in Estonia, go to our dedicated page.
Fiscal policy
Estonia's fiscal deficit averaged 1.1% of GDP in the decade to 2023. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 6.3% in the decade to 2024. For more information on Estonia's unemployment click here.
Inflation
Inflation averaged 4.3% in the decade to 2024. Go to our Estonia inflation page for extra insight.
Monetary Policy
Euro Area monetary policy rate ended 2024 at 3.15%, up from 0.05% a decade earlier. See our Estonia monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the euro weakened by 20% vs the U.S. dollar. For more info on the euro, click here.
Economic situation in Estonia
After shrinking for 10 straight quarters, the economy temporarily got its head above water in Q4, only to contract again in Q1. As such, Estonia remains anchored to the bottom of the Euro area’s GDP growth league table. In Q1, inflation was yet again higher than in neighboring countries, which, in conjunction with a looser labor market, led consumer spending to fall. Switching to Q2, the economy should have finally turned a new leaf and grown again, buoyed by the ECB’s interest rate cuts. In April, industrial output rose at a faster pace than in Q1 and retail sales rebounded. Moreover, in April–June, consumer sentiment pepped up, boding well for consumer spending. That said, GDP growth likely remained weak, with consumers still pessimistic compared to other Euro area countries as inflation and the unemployment rate remain elevated.Estonia Economic Forecasts
Projections out to 2034.47 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 17 expert analysts.
Want to get insight on the economic outlook for Estonia in the coming years? FocusEconomics collects projections out to 2034 on 47 economic indicators for Estonia from a panel of 17 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Estonia economy. To download a sample report on the Estonia's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.