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Economy and Finance

Economic forecast for Estonia

The latest macroeconomic forecast for Estonia. 

Economic growth stalled in the first quarter of 2022, after reaching 8.3% in 2021. Household consumption remained buoyant, despite steep price increases; exports of services and private investment dropped sharply, while imports of both goods and services soared. As a result, GDP grew by just 0.1% q-o-q. Employment increased further in the first quarter of 2022 and is set to expand further this year, also thanks to the significant inflow of people displaced from Ukraine. Average nominal wages grew by more than 10% y-o-y in May, with notably high increases in information and communication services and accommodation and food services.

Last update : Summer 2022 Economic Forecast (14/07/2022)

Indicators2020202120222023
GDP growth (%, yoy)-3,08,31,61,9
Inflation (%, yoy)-0,64,517,04,7

Since the beginning of the war, economic conditions worsened considerably on account of trade restrictions, continued increases in the prices of energy, industrial commodities, fertilisers and food, and elevated uncertainty. Gross fixed capital formation is projected to decrease substantially in 2022 due to a drop in corporate investment and in construction, and is set to rebound in 2023.

Output growth is expected to have turned negative in the second quarter, decrease further in the third quarter and then pick up slowly by the end of the year. Annual growth of private and public consumption is projected to slow down in 2023, while investment and net exports would support economic expansion. On an annual basis, real GDP is forecast to grow by 1.6% in 2022 and by 1.9% in 2023.

Inflation is forecast to average 17.0% in 2022, the highest since 1996. Surging energy prices in the first half of the year are set to fuel sizeable increases in the prices of food, industrial materials and services. These, mainly imported inflationary drivers, are expected to subside in 2023, when inflation is forecast to decelerate to 4.7%.