In construction and related areas in particular, the pinch has been felt south of the Gulf of Finland, with one window-making firm based near Tallinn having to file for bankruptcy and lay off 70 people.

As Estonia's largest trading partner, the downturn there slows Estonia's economy too, SEB analyst Mihkel Nestor noted.

"Essentially in every conceivable sector. Industrial results have not been good, retail trade and domestic consumption in general are at rock bottom, and, perhaps most worrying of all, the construction market is practically non-existent [in Finland].Naturally, this impacts us. It is very difficult for me to imagine any kind of miraculous growth figures for the Estonian economy in a situation where Finland is doing very poorly. We are so closely connected," Nestor told "Aktuaalne kaamera".

Estonian window maker Fenestra has just filed for bankruptcy at a time when Finland's construction market hit a decades-long slump, hurting Estonian exporters and with no recovery in sight for Finland's economy.

Trigon Capital, owned by businessman Joakim Helenius, acquired Fenestra in 2022, when the company was already struggling. Eighty percent of its production depended on the Finnish market at that time. Finland's economy was already weak even at the time, Helenius said, but his company bet on an improvement in the economic situation in Estonia's neighbor to the north.

"The company had a strong brand in Finland, people there recognized Fenestra as a window manufacturer, and we believed that the tough times in Finland would pass. In reality, what transpired was the Finnish construction market and new construction in Finland declining year on year. Right now, for example, the sales volume for new apartments is so low that I think levels like that were last seen perhaps 30 to 40 years ago. Finland's construction market is in a total crisis. For example, Finland's largest construction company, YIT, has announced that they are no longer building apartments in Finland," Helenius said.

Helenius said €4.5 million was injected into Fenestra, but even that failed to stave off bankruptcy. The result is 70 employees at the Fenestra facility in Peetri, just outside Tallinn, will lose their jobs.

Meanwhile, Arcwood, a manufacturer of glued laminated timber construction components based in Põlva, has managed to find a market niche in Finland on projects requiring more custom work and fewer standardized products.

"For Arcwood, the Finnish market is very important. I would venture to say that around 50 percent of our CLT production goes to Finland, making it highly significant for us. Overall, Finland currently accounts for 25 percent of our business. The products are specially shaped glued timber beams and cross-laminated timber used in the construction of public buildings, kindergartens, schools, and various office buildings," said Raido Peedomaa, head of sales at Arcwood.

Finland's Ministry of Finance recently downgraded its economic forecast for the Finnish economy, citing the crisis in the Middle East as a major factor, Yle reported.

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