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Tammist: Estonia’s economic situation is good, but we should keep our sights on the future


Estonian Institute of Economic Research’s quarterly survey shows that the economic situation is good, but the prognosis warns of a slowdown in economic growth.

If the expected economic growth for last year was 3,6%, then 2019 forecast is 0,3% points smaller. Main positive factors contributing towards the economic growth are high employment rate, rapid wage growth and an increase in household wealth. On the other hand, three main issues hindering development are lack of skilled labour, lack of innovation and insufficient competitiveness.

Last year’s fourth quarter statistics show that 94% of participating experts’ consider current economic situation as favourable. The positive opinion has remained over 80% for 6 quarters in a row.

Minister of Entrepreneurship and Information Technology Rene Tammist says that we should look at the future prospects. „Even though in the European Union the unemployment rate is the lowest in measurement history, there are still risks, that need attention. Stock markets have become unstable and there is more uncertainty in global trade relationships. Additional risks are created by Great Britain’s departure from The EU without the corresponding agreement,“ the Minister noted.

Private consumption situation is continually good. Wage growth remains fast and the forecast shows that the average wage will increase to 1380 € per month. Also, the experts are expecting inflation to slow down. In the last months, oil prices on the global markets have significantly decreased and there are no signs of domestic factors, that would increase the prices. None of the interviewed experts predicted price increases.

Households estimates on the economic situation haven’t significantly changed during the last year. Most of the families estimated in December that their economic situation was the same as a year ago. Last year, 22% of families felt that their economic situation improved and 21% felt that it deteriorated.

Favourable financing conditions and increased profitability have supported growth in industrial production. However, there are signs that growth in external demand is slowing down. „Although in November, Estonia made an all-time record in one month’s export volume, the import growth slowed. This means that the growth of sectors which are using imported inputs may also slow down in the future,“ Minister Tammist noted.

IT sector market conditions remain favourable. Demand is strong sales and will keep growing oncoming months. IT companies main problem is shortage of skilled workers. However, in the last 3 months, 35% of IT companies managed to hire new employees.

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Estonian Institute of Economic Research (Eesti Konjunktuuriinstuut) published yesterday its half-year survey, which underlines that Estonia’s current economic state has remained good for the eighth quarter in a row. At the same time, the economic confidence index, which reflects business confidence in the European Union and Estonia, is on a downward trend.