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Economic forecasts anticipating 2 pct GDP decline for Estonia this year

Estonia’s major economic forecasts for this year predict a gross domestic product (GDP) decline of around 2 percent.

According to the most recent economic forecast by the Bank of Estonia, published this Tuesday, the Estonian economy will shrink by 2.2 percent this year. However, by 2024, the central bank anticipates a 1.4 percent increase, and a 4 percent economic growth in constant prices for 2025.

According to the Ministry of Finance’s summer economic forecast, the Estonian economy will fall by 2 percent this year, but for the coming year, the ministry forecasts a real GDP growth of 2.3 percent, and a 3 percent growth for 2025.

Swedbank, in its latest economic outlook, expects a 2 percent GDP decline for Estonia this year but anticipates a 2 percent and 3 percent economic growth for 2024 and 2025, respectively.

SEB predicts a 1.8 percent economic decline for Estonia this year, with the bank forecasting a 1.5 percent economic growth for next year and a 3 percent growth for 2025.

According to Luminor’s fall economic forecast, the Estonian economy will fall by 2 percent this year, remain at zero the next year, and rise by 4 percent the year after next.

Thus, this year’s economic decline forecasts range between 1.8-2.2 percent, with commercial bank SEB being the most optimistic, and the central bank being the most pessimistic.

In the second quarter of this year, the GDP fell by 2.9 percent year over year, while the economic decline in the first quarter was 3.2 percent.

Meanwhile, some slowdown in last year’s extremely rapid inflation is also predicted for this year. The Bank of Estonia expects the consumer basket to become 9.4 percent more expensive this year. For the coming year, the central bank predicts 3.4 percent inflation, and 1.9 percent inflation for 2025.

According to the Ministry of Finance’s forecast, consumer prices will increase by 9.6 percent this year. The ministry expects inflation to be 4.6 percent next year and 2.5 percent in 2025. The ministry noted that added tax measures are holding back a more substantial slowdown in inflation.

Swedbank estimates that the growth of consumer prices will slow down this year from last year’s 19.4 percent level to 9.8 percent. Next year, according to the bank’s forecast, inflation will slow down to 4.3 percent, and to 2.4 percent in 2025.

According to SEB’s forecast, consumer prices will grow by 9.5 percent this year. The bank estimates that inflation will slow down to 4.5 percent next year and to 2.5 percent by 2025.

Luminor predicts a 9-percent consumer price growth for this year and 1 percent inflation for both the coming year and the year after next.

Therefore, this year’s inflation forecasts range between 9 and 9.8 percent, with Luminor predicting the smallest price growth and another commercial bank, Swedbank, forecasting the highest.

Since the consumer price index rose by a whopping 19.4 percent in 2022 compared to the average of 2021, price growth will slow down significantly this year. In August, the consumer price index grew by 4.6 percent compared to a year ago.

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)


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