Riin Kadarik, leading analyst at Statistics Estonia, said that manufacturing production, which had increased for three months, started to decrease in February.

"This was influenced by the decline in production volume in the manufacture of food products and electrical equipment, down by 5.3 percent and 9.5 percent, respectively. The lower output in the manufacture of food products is related to the fall in retail trade volume and demand as well as the rise in food prices. The decrease in the manufacture of electrical equipment was mainly due to the high reference base, as the volume of production was high in February last year," explained Kadarik.

Just over half of manufacturing activities saw rises. Among the major industries, output increased by 1.5 percent in the manufacture of wood, by 4 percent in the manufacture of fabricated metal products and by 1.1 percent in the manufacture of computer, electronic and optical products.

In February 2026, 67 percent of the total production of manufacturing was sold to the external market.

Compared with February 2025, the sales of manufacturing production decreased by 3.1 percent at current prices according to working-day adjusted data. Domestic sales rose by 0.8 percent, while export sales fell by 5.2 percent.

In February, compared with January, the seasonally adjusted total industrial production fell by 0.7 percent and the production of manufacturing by 0.8 percent.

In the energy sector, output increased at constant prices, but the volume of electricity production in megawatt-hours decreased by 3.8 percent in February.

"The production of heat was up by 10.2 percent in February year on year, as winter temperatures were lower than usual," added Kadarik.

Economist: Data contradicts official figures

Raul Eamets, chief economist at Bigbank, called the decline in manufacturing surprising, as the result contradicts comments given by both the Bank of Estonia and the Ministry of Finance last week during the presentation of their economic forecasts.

"One of the main theses was that up until the beginning of this year, our economy had been on an upward trajectory and that all the prerequisites for solid economic growth had been created," he noted.

"Looking ahead, it can also be said that the impact of the Iran crisis will likely not yet be visible in March's economic results. The first wave of the impact of the Iran war will reach us through higher fuel prices, meaning that all kinds of transport services will become more expensive, from freight transport to bus and air travel. When companies begin to reflect higher transport costs in the prices of their end services and how this will affect demand, we will see in the coming months," Eamets said.

"The next two major channels of influence will start to affect our cost of living more in the fall, when the new heating season begins and intermittent electricity (solar and wind) no longer helps us. The oil and gas crisis will then be reflected in energy prices," Eamets noted.

"The third channel is food prices rising in the autumn, as agricultural production becomes more expensive due to increased fertilizer prices. One thing is certain — inflation figures will be high this year, possibly even higher than last year."

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