On Thursday, Statistics Estonia reported Gross Domestic Product (GDP) fell 3.9 percent on year in the third quarter. This was a steeper decline than posted for the first half of 2023.

Finest Hall's Sales Director Martin Ivanov said: "The market today is not conducive to growth and we are down, say, 40 percent in terms of turnover. But there is still work because we are not only dealing with PVC halls, we are also producing metal structures, we are involved in mechanical engineering, we are just producing curtains, covers, and different PVC products."

The company has tried to increase its productivity by diversifying its products, for example, it invested in a laser cutting bench. But the number of exports has still fallen.

"Five years ago, 70 percent were exported, 30 percent were Estonian, but today we can say that somewhere between 60 and 65 percent are still Estonian and the rest are exports," Ivanov told Thursday's "Aktuaalne kaamera".  

Industry and transport sectors have been hardest hit by the economic downturn.

"The situation is worst for exports. Industrial exports have collapsed, and broadly all definitions of merchandise exports have led to this decline," said Bank of Estonia Economist Kaspar Oja.

Luminor's Chief Economist Lenno Uusküla said the total decline is higher than 6 percent.

"If we take into account the fact that Estonia's population has increased by the number of Ukrainian refugees in the meantime, we are talking about a drop in GDP per capita of more than 8 percent. This is much higher than it was in the Covid crisis. It was a one-off shock and then the recovery was rapid. Now we have had a worse situation quarter after quarter, which really gives very little hope," said Uusküla.  

Due to the worsening outlook, forecasts have been made more often and become more negative.

"Looking at past forecasts, the magnitude of the negative surprise, its carry-over into the next few years technically implies that the economy is more or less close to zero or even in a mild downturn. I do not at all rule out the possibility that we could see three consecutive years of recession," said Oja.

Uusküla said at least prices have stopped rising and Estonia could still be the first in Europe to bounce back.

"If the Estonian economy is the first to fall, history has shown that it is also the first to rise," he stated.             

The Ministry of Finance confirmed the deficit will not affect this year's budget execution. Neither does it see the need for a new forecast.

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