Swedbank has left Estonia’s economic growth forecast for both this and next year unchanged at 3.9 and three percent, respectively.
According to the bank, the Estonian economy is expected to grow 3.9 percent this year before decelerating to three-percent growth next year due to the weakening of the economy’s growth cycle.
Although the outlook of the import of Estonia’s trade partners allows the bank to forecast a slight weakening of foreign demand this and next year, it will nontheless remain strong enough and offer Estonian companies good export opportunities.
The security of companies is still high. Unused capital has decreased due to the increase in demand, forcing companies to invest more. Market interest rates should start increasing gradually, but these will remain low enough in the near future at least, and will promote investment.
The impact of EU funds in the investment of the government sector is to increase. The growth in the investment of companies and the government
sector should decelerate this year, but their rate in relation to GDP will increase.
According to Swedbank’s forecast, the growth of consumer prices this year will decelerate to three percent due to the alleviation of external price pressures. Both the prices of crude oil and other raw materials should grow at a slower tempo this year. The increase in food, alcohol and tobacco prices will contribute the most to inflation.
Strong economic growth will support labor growth and keep unemployment low, even though the work capability reform will increase the number of jobseekers with reduced work capacity. Fast wage growth should continue this year as the supply of workforce will not be able to keep up with the demand for workforce. The number of vacancies has risen to the highest it has been since the last economic crisis.
Swedbank is estimating the fastest economic growth in the Baltic countries to be in Estonia this year, while the bank lowered Latvia’s forecast from 4.2 to three percent.
Estonia’s forecast was left unchanged at 3.9 percent compared to earlier, while Lithuania’s 3.1 percent forecast was also left unchanged. Swedbank is forecasting an economic growth of 3 percent in Estonia, 3.2 percent in Latvia and 2.5 percent in Lithuania for next year.
According to Swedbank’s forecast, Estonia’s inflation will be 3 percent this year and 2.5 percent next year. The forecast for Latvia is 3.3 percent and 2.5 percent and for Lithuania 3 percent and 2.5 percent, respectively.
