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Estonia Investment

Estonia Investment

Fixed Investment in Estonia

Estonia recorded average fixed investment growth of 4.6% in the decade to 2022, above the 2.2% average for the Euro Area. In 2022, fixed investment growth was -3.7%. For more investment information, visit our dedicated page.

Estonia Investment Chart

Note: This chart displays Investment (annual variation in %) for Estonia from 2014 to 2023.
Source: Macrobond.

Estonia Investment Data

2019 2020 2021 2022 2023
Fixed Investment (ann. var. %) 6.2 10.7 7.3 -3.7 -3.0

GDP records smallest contraction in six quarters during Q1

GDP shrank at a milder pace of 2.4% year on year in the first quarter, compared to the 2.6% fall recorded in the fourth quarter of last year. Q1's reading marked the seventh consecutive decline but was the best result since Q3 2022. On a seasonally adjusted quarter-on-quarter basis, GDP declined 0.5% in Q1, compared to the previous quarter's 0.6% decrease. Q1's reading marked the smallest contraction since Q2 2023.

Looking at the details of Q4’s release, government spending rebounded, growing 0.5% in Q1 (Q4 2023: -4.4% yoy). Moreover, fixed investment growth surged to 11.1% in Q1, well above the 0.9% increase in the previous quarter. That said, household consumption fell 1.4% in the first quarter, which contrasted the fourth quarter's 0.6% expansion and came off the back of deeply pessimistic consumer sentiment, still-elevated inflation and a higher unemployment rate. On the external front, exports of goods and services declined at a quicker pace of 7.8% in Q1 (Q4 2023: -7.3% yoy), as exports of services swung into contraction. In addition, imports of goods and services contracted at a quicker rate of 6.7% in Q1 (Q4 2023: -3.6% yoy).

The economy is forecast to rebound overall in 2024: Domestic demand will underpin the recovery, with private spending, public consumption and fixed investment all bouncing back this year. That said, a sluggish recovery in the Nordic economies will continue to weigh on the external sector. As a result, GDP growth will remain below its prior 10-year average of 2.4%. Faster-than-expected monetary policy loosening is an upside risk, while the delayed absorption of EU funds is a downside risk.

Analysts at the EIU commented: “Private consumption growth will rebound in 2024 as inflation moves closer to the ECB's 2% target, allowing real wages to accelerate and easing the pressure on real household disposable incomes. Government consumption will make a modest positive contribution to growth; however this impact will be limited by the government's ongoing fiscal consolidation plans. […] The main factor that will weigh on the recovery will be tight monetary policy in the euro area until the middle of 2024. This will hinder the economic performance of most of Estonia's main trading partners, keeping manufacturing and export orders subdued.”

Consensus Forecasts and Projections for the next ten years

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Estonian investment projections for the next ten years from a panel of 5 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 investment forecast available for Estonian investment.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Estonian investment projections.

Want to get access to the full dataset of Estonian investment forecasts? Send an email to info@focus-economics.com.

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