Swedbank says that while the second coronavirus wave will lead to a slowdown in the economy in the fourth quarter of 2020 (Q4 2020), Q3 had nonetheless seen improvement despite rising coronavirus rates.
While wage growth in Q3 outstripped that of the previous quarter (3 percent versus 1 percent) as economic activity picked up in the summer after spring phase of the pandemic, this will peter out somewhat, the bank says.
Liis Elmik, senior economist at Swedbank, said: "Whereas in Q2 2020 the number of hours worked per employee was five percent smaller than a year ago, in Q3 the figure was about the same as a year ago."
While infection rates have been growing and even exceed those of the spring COVID-19 wave, the state is more on top of how to respond with restrictions, which has helped mitigate the negative effects on the economy, she said.
Elmik said: "As a result, the impact of the restrictions on the economy should be softer than in spring."
Swedbank estimates that average gross wages in Estonia, inclusive of the state wage support scheme initiated in spring, will grow by just 3 percent this year. However in 2021, as economic growth picks up, wage growth is forecast to rise to 3.5 percent.
Deflation through 2020 will stand at 0.4 percent, Elmik added.
"The situation of households will be mitigated by the stopping of price growth - the price level will decline by 0.4 percent this year."
Of positive signs, Elmik said that while in spring the wage level was lower than a year ago in half the sectors of the economy, in the summer, this was the case in just two sectors - trade and tourism.
Average remuneration did not change in construction, even though the volume of work declined by about one-tenth year on year.
Wages continued to grow in higher-payscale sectors such as IT, energy, and finance, Elmik noted.
Editor: Andrew Whyte