The Estonian Institute of Economic Research (Eesti Konjunktuuriinstituut) has revised its forecast on 2020's economic decline upwards to a 5 percent fall. In summer the institute had predicted an 8 percent decline.
The institute says that the ongoing effects of the coronavirus crisis, low demand and a shortage of third-country labor are factors, topped off with an unemployment rate forecast at 7.5 percent for 2020.
The institute says it also expects a 6 percent decline in industrial production this year, though one sector seeing small levels of growth is real wages, which it expects to rise by 0.8 percent.
The institute says that the economic situation has improved since June in some areas, particularly in private consumption.
Institute: Recovery due in March
The institute says that it expects some improvement by or in March 2021, with improvements in foreign trade and price rises contributing to the peak of the crisis being passed between now and year-end.
Institute: Falling demand and labor shortage issue for firms
The volume of work for construction companies remained on a downward trend in the third quarter, and the forecasts for the volume of construction for the fourth quarter remain pessimistic.
The institute says that around a fifth of construction companies themselves forecast a price level decline.
Against the background of the coronavirus, the biggest problem for companies has been reduced demand, which will start to pick up next March, albeit tentatively, the institute says.
Wage cuts, layoffs, canceled business travel and additional costs continue to be an issue, along with costs associated with the coronavirus and the labor shortage, in the institute's estimation.
Dairy product prices falling, meat rising
The Institute of Economic Research also considered a basket of goods corresponding to the purchases of a family of four over the period of the a week.
The institute said the basket would see inflation of 2.6 per cent, or a little over two euros, over the course of the year, though when taking the fourth quarter alone, the rise would be less than one percent.
Apples, cereals, meat products and eggs have become more expensive over the year, whereas dairy products, potatoes, vegetables and fish now cost less.
Of dairy products, cream saw the largest fall on the year, of 2.5 percent; cheese bucked the trend by seeing a price increase.
Apples on the other hand cost almost two-and-a-half times more than they did a year ago.
Meat and meat products rose by over 5 percent in price, with sausages and smoked products being particularly hit, but mince less so.
Cereal products saw a three percent rise, and eggs rose by 1.1 percent in price.
Other recent forecasts for Estonia's economy include the Bank of Estonia's assessment of -4 percent, the finance ministry's prediction that a -5.5 percent downturn in 2020 will be followed by a 4.5 percent recovery in 2021, and forecasts of downturn up to -5 percent followed, again, by 4.5 percent growth, from two of Estonia's major high street banks.
Editor: Andrew Whyte