Institute expects Estonian economy to grow 2.5 pct in 2016

Employees at work. Photo is illustrative. (Postimees/Scanpix)
1/8/2016 3:02 PM
Source: BNS
Category: Economy

The Institute of Economic Research (EKI) estimates that the economic situation has somewhat deteriorated but the six-month outlook is moderately positive and predicts 2.5 percent growth for the Estonian economy this year.

In its newly-released winter outlook, the institute forecasts that Estonian exports will amount to 12 billion euros, unemployment reach 5.7 percent, nominal wages reach 1,105 euros and real wages grow 3.2 percent this year. According to the forecast consumer prices will rise by roughly 1 percent.

Estonia's economic growth in 2015 will apparently be slower than the 2.9 percent registered in 2014 and also fall short of the expected 2 percent, it appears from the institute's fourth-quarter economic review.

EKI analysts in December rated the overall situation of the Estonian economy with 4.3 points, 1.1 points lower than in the previous review in September. Some 82 percent of the analysts regard the situation as satisfactory and 18 percent, as poor.

The investment situation is considered satisfactory by 24 percent and bad by 76 percent of the analysts. The consensus rating of 1.9 points is the lowest since the second quarter of 2010.

The private consumption situation is seen as good by 76 percent and as satisfactory by 24 percent of the analysts. The consensus rating of 8.1 points is the highest since the second quarter of 2007. EKI estimates private consumption to have grown by more than 5 percent in 2015.

Some 35 percent of the analysts expect the economic situation will have improved six months from now, 41 percent believe there will be no change and 24 percent anticipate a deterioration. The overall assessment of the six-month outlook is 5.5 points, 0.1 point higher than in September.

The investment situation is expected to improve over the next six months by 24 percent, remain unchanged by 47 percent and turn for the worse by 29 percent of the analysts. Six percent believe the private consumption situation will improve, 59 percent think it will not change and 35 percent expect the situation to worsen.

Export volumes are expected to increase by 41 percent, stay at present levels by 35 percent and decrease by 24 percent of EKI analysts. At the same time 47 percent think imports will grow while 35 percent expect no change and 18 percent think the volume of import will decline.

Even 71 percent of the analysts believe inflation will pick up in 2016 while 29 percent expect no change. Consumer prices are forecast to rise by 1.1 percent in 2016 and the long-term forecast until 2020 is 2.0 percent.


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