According to the European Commission's autumn 2022 economic forecast, Estonia is expected to experience a 0.1 percent contraction this year. Next year, the Commission forecasts a 0.7 percent growth in Estonia's GDP, followed by further increase to 2.1 percent in 2024. The Commission also predicts that inflation in Estonia will fall to 6.6 percent in 2023.
The European Commission's latest eonomic forecast highlighted, that the post-pandemic boom, which Estonia's has experienced in private consumption, along with price increases, have started to slow. However, measures planned in next year's state budget should support economic growth.
Energy price increases, which underlie the rapid inflation, will have an impact on the cost of other goods and services. This should however, be mitigated by a cap on electricity and gas prices for private consumers and small businesses in the coming years.
According to the report, the government deficit is projected to expand to 3.7 percent of GDP in 2023 before falling again in 2024, while public debt is expected to increase slightly, to 21 percent of GDP in 2024
For the European Union as a whole, the Commission expects GDP to grow by 3.3 percent this year, and by 3.2 percent in the euro zone. In 2023, both are forecast to slow to 0.3 percent.
EU inflation is predicted to accelerate to 9.3 percent, and 8.5 percent in the euro zone this year, while in 2023 the Commission expects this to slow to 7 percent in the former and 6.1 percent in the latter.
According to the latest forecast from Bank of Estonia (Eesti Pank), Estonia's GDP may contract by 0.5 percent on, with economic growth expected to be close to 1 percent in 2023.
The European Commission's Autumn 2022 economic forecast for Estonia can be seen in full here.
Editor: Michael Cole