A survey conducted by the Estonian Institute for Economic Research found that consumer confidence has dropped over the past two months.
According to the institute, the confidence levels have taken a turn for the worse largely due to the Russia-Ukraine conflict and the economic sanctions set to and by Russia as a result.
Of those polled by the institute in September, 24 percent expected Estonia's economic situation to improve over the next 12 months, 35 percent said that the situation will stay the same and 28 percent believed it would get worse.
The public's opinion on the job market also took a turn for the worse. In August, 27 percent of the respondents said that unemployment may rise over the coming year. This percentage stood at 38 in September.
Almost half of Estonian households spend as much as they earn, although more people have started saving. Whereas a year ago only 35 percent of families had some sort of savings, this is now up to 44 percent.
"Respondents say that their family is in a good situation but the consumers are also influenced by the affairs of the state and the views on that have become more pessimistic in September," said economist Marje Josing.
Experts predict that in 2014 the Estonian economy will grow by 2 percent, and private consumption by 3.5 percent.
Average gross salary will be 1,000 euros and the unemployment rate will be 7.5 percent.
Businesses concerned about workforce
The Institute of Economic Research said that Estonian economic situation is highly dependent on its export partners, all of whom (including Russia) are expecting an improvement in the overall economic situation.
Employers, at the same time, cite the lack of qualified workforce as a key concern.
Although nearly one third of the polled companies said that they felt the impact of the conflict between Russia and Ukraine, only 4 percent finds this impact to be of importance.
Industrial enterprises are concerned with the ruble becoming increasingly weaker. There are also problems with obtaining raw material from Ukraine and its transit through Russia.
It is estimated that Russia's ban on import has cost Estonia about 75 million euros and indirectly to as much as 150 million euros.
Meelis Kitsing, the head of the Ministry of Economic Affair's economic analysis division, said: "The long-term indirect impact of the conflict is definitely greater than the short-term direct impact. Estonian entrepreneurs cannot wait for the recovery of the Russian market but have to adapt to the changed situation and find new markets for their goods and services."