Robert Müürsepp, head of Statistics Estonia's national accounts team, said an overall improvement in Estonia's economic situation continued in Q1 2025.

Between Q4 2024 and Q1 2025, GDP rose by 0.1 percent, after seasonal and working-day adjustments are factored in.

Statistics Estonia is due to publish the full Q1 2025 GDP data on May 30.

Statistics Estonia uses statistical models in compiling the GDP flash estimate, which are not methodologically comparable with those used in official GDP calculations.

Some economists urge caution on optimism

Bigbank chief economist Raul Eamets said that the flash estimate gives reason for optimism.

"The economy was turning upwards already in the last quarter of last year when we saw a similar 1.1 percent annual growth. Economic recovery is also supported by other indicators. For example, recently published retail figures for March showed two percent growth. Exports have started to grow, industrial production figures for February showed growth. The number of unemployed has also decreased," Eamets said.

Chief economist at Luminor bank Lenno Uusküla, however, noted that it might be more accurate to say the economy is no longer in decline.

"Economic growth is still scanty, it doesn't show up well from behind the utility pole. It's not completely absent, but whether the growth is visible depends on which side of the pole you're looking from," Uusküla said.

"The worst is over for now. The economy is no longer falling. But it's also not rising significantly," Uusküla added. "In the first quarter of this year, GDP remained practically at the same level as in the fourth quarter of last year, rising by only 0.1 percent."

He also said that the modest growth seen between the last quarter of last year and the first quarter of 2025 was likely mostly made up of the effects of the car tax, which came into effect at the start of the year.

"Growth in the last quarter of last year was 0.7 percent. This is moderate growth for the Estonian economy, but considering the hole we are coming out of, it remained weak. Unfortunately, behind this growth was not real economic revival, but rather early car purchases and a decrease in car inventories, which directly influences economic growth positively," said the economist.

The economic growth outlook for this year is full of uncertainties, including as a result of the Donald Trump tariffs. "The tariff lottery started by Trump has put the prospects of many exporters in a difficult position. The end of the war in Ukraine is awaited, but it's unclear whether its terms would be favorable for us," he said.

As for positives: "On the other hand, Estonia's economic potential remains strong. There is no shortage of smart people and enterprising companies. The government is increasing defense spending, which will partly spill over into domestic demand," Uusküla concluded.

Editor's note: This article was updated to include quotes from Raul Eamets and Lenno Uusküla.

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