In June, the growth of sales revenue in manufacturing also slowed — in the first half of the year, sales revenue increased by one percent, but compared with last year's growth, this was a significantly weaker result, Mertsina noted.

According to Statistics Estonia, industrial companies produced 4.6% less output in June 2026 at constant prices than at the same time last year. Statistics Estonia lead analyst Riin Kadarik noted that manufacturing output decreased for the fifth consecutive month. "The largest manufacturing activity, wood processing, fell by 2%. In June, food production also declined again, decreasing by 3.3%."

Mertsina said that changes in manufacturing output in recent quarters have not aligned with the value added recorded for the sector in GDP.

"In the first quarter, despite stagnant manufacturing output, the growth of value added in GDP terms was strong and accounted for more than half of all value added created in the economy," Mertsina said.

Overall confidence shows improvement

Although confidence among Estonian industrial companies has not changed in recent months, compared with the beginning of the year it still shows improvement, and confidence is also much stronger than a year ago, he noted. For example, assessments of orders and expectations for output volume have improved.

"Manufacturing companies in the euro area as a whole have also become more optimistic," Mertsina said.

Although moderate recovery is visible in European manufacturing, demand remains uneven, and investment decisions continue to be affected by geopolitical tensions, trade restrictions and uncertainty about the global economic outlook.

"Uncertainty in trade policy and companies' desire to increase inventories amplify these effects. Tariffs and possible new trade restrictions have pushed companies to reorganize production and supply chains and to bring imports forward, adding extra pressure on logistics systems," Mertsina added.

According to him, European companies increasingly prefer to diversify suppliers, increase inventories and bring part of production closer to end markets, which improves security of supply but often means higher production costs.

"Estonian manufacturing operates in an environment where competitiveness depends not only on productivity and labor costs but increasingly on the ability to adapt to rapidly changing global conditions. The strength of Estonian industrial companies lies in flexibility, export experience and the ability to adjust quickly," Mertsina said.

Palts recommends companies invest in long‑term strategy

Director General of the Estonian Chamber of Commerce and Industry Mait Palts said that companies succeed in export markets when they make long‑term plans and follow through on them.

"A great deal comes down to consistent work and determination. Companies that are active in export markets and can invest long‑term and act strategically often end up more successful," Palts said.

According to Palts, entering export markets is more difficult for smaller companies because it involves greater risks. "Success does not appear within months but often only after a couple of years, because everything requires resources and investment certainty," he said.

Välja: success comes from higher‑value products

Henrik Välja, head of the Estonian Wood Industry Association, said that shifting sales portfolios toward higher‑value products helps companies grow revenue.

Välja noted that companies need at least an equivalent business environment to that of competitors in neighboring countries to remain competitive. In his view, requirements in Estonia restrict the wood industry more than in nearby countries, increasing costs and reducing competitiveness.

"To compete in export markets, domestic restrictions cannot be significantly more extensive than in neighboring countries, but unfortunately today they are. Estonia's domestic policy plays a major role in supporting competitiveness," Välja added.

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