Estonia Private consumption

Economic growth rises in the first quarter of 2026

Q1 GDP growth hits over four-year high: Estonia's GDP grew 2.4% on a year-on-year basis in Q1, following 0.7% growth in the previous quarter. Q1's reading was the strongest since Q4 2021. On a seasonally adjusted quarter-on-quarter basis, GDP grew 1.1% in Q1, following a 0.3% expansion in the prior quarter.

Private spending rebound drives improvement: Relative to the previous period's data, readings in Q1 improved for private consumption (+4.2% on a year-on-year basis vs -0.1% in Q4) and government consumption (+4.8% vs +3.1% in Q4). In contrast, readings softened for fixed investment (-13.3% vs +6.9% in Q4), exports of goods and services (+0.6% vs +5.0% in Q4) and imports of goods and services (+1.6% vs +3.5% in Q4). Q1’s GDP acceleration was mainly driven by strong domestic demand, particularly private consumption, which rebounded sharply as households increased spending on transport, recreation, sports, culture, and financial and insurance services. Government consumption also strengthened, supported by higher defense-related expenditure. On the downside, fixed investment recorded its steepest contraction in nearly four years, as companies and households scaled back spending on machinery, equipment and construction, likely reflecting weaker confidence and elevated geopolitical uncertainty.

GDP growth to hit multi-year high in 2026: Our panelists expect the economy to continue expanding in Q2, despite headwinds from geopolitical tensions and elevated energy prices. Looking at 2026 as a whole, GDP growth is set to more than triple from last year and hit a five-year high, driven by a rebound in private consumption, accelerating fixed investment supported by relatively low interest rates, and solid government spending—particularly on defense. Downside risks remain from worsening tensions with Russia and persistently high energy prices stemming from the Iran conflict, which could dampen household purchasing power and business investment.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Estonian private consumption projections for the next ten years from a panel of 9 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. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable private consumption forecast available for Estonian private consumption.

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