Institute of Economic Research predicts a recession of 8 percent

Ülemiste Keskus shopping mall in Tallinn.
Ülemiste Keskus shopping mall in Tallinn. Source: Anna Aurelia Minev/ERR

The Estonian Institute of Economic Research (Eesti Konjunktuuriinstituut) predicts a recession of 8 percent for the rest of 2020, on the assumption a second wave of COVID-19 will not hit the country.

Marje Josing, director of the Estonian Institute of Economic Research, told ERR the second quarter of the year will remain the lowest point. "This was a crisis quarter and there has been no such extraordinary quarter since Estonia regained its independence [in 1991], the economy completely stopped in a few days and some sectors closed entirely."

Josing noted indexes and indicators for economic trust and confidence, which the Institute deals with, have been very low during the second quarter in all of Europe. April was the most difficult month everywhere, including Estonia, where problems with supply and demand arose.

Josing predicts the indicators and demand will remain low for the next two months: "But at least the trend is positive. The next six months or year will improve the situation but there an immediate recovery can be seen from data collected by companies."

The prediction of an 8 percent recession will only happen if the economy is able to recover. "It is clear the coronavirus will not go anywhere but if we can manage it in a way that allows for the economy to continue, we can talk of a roughly 8 percent recession."

Josing said if the coronavirus were to return in fall, lower numbers would have to be accounted for: "If we want the Estonian economy to remain strong, we can't forget that the virus exists in the world and that it is an important issue. The human memory tends to be short: We were just panicking and now we've forgotten all about it and are living our regular lives. Life will not be the regular for another year, however."


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Editor: Kristjan Kallaste

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