Swedbank forecasts 0.6 economic growth in Estonia this year, to rise in 2027
Estonia's economy will grow by 0.6 percent this year, but higher private consumption and government investments will boost growth to 2.3 percent in 2026, Swedbank says.
Growth will rise further still to 2.6 percent in 2027, according to Swedbank.
Government stimulus will help accelerate economic growth, but the resulting increase in the budget deficit will make the economy more vulnerable, Swedbank's chief economist Tõnu Mertsina noted.
While consumer prices are expected to rise by 5.1 percent this year according to the Swedbank forecast, the impact of tax hikes will recede next year, and inflation will slow to three percent.
"On the one hand, we see the economy gradually improving, and the main driver of next year's faster growth is the abolition of the tax wedge, which should help promote consumption, although this effect will likely emerge gradually. Furthermore, higher government sector investments should give additional momentum to economic growth. In addition, lower interest rates and slowing inflation should gradually have a more favorable impact," Mertsina said.
--
Editor: Andrew Whyte, Marko Tooming
