"The labor market remains in excellent condition. Employment is at an all-time high," Kaasik said describing the outgoing year. "But we also have a lot of people actively looking for work," he added.

The deputy governor said that wages have also grown and will likely continue to do so. "Salary advance pressure will probably persist. The recent agreement to hike the minimum wage by 13 percent will also cause other lower-end salaries to rise," Kaasik said.

But the Bank of Estonia forecasts the unemployment rate to start growing and the number of available jobs to go down next year.

"The energy crisis, rapid price advance, the cumulative effect of different shocks mean that many companies' business models are not working as they used to," Kaasik remarked. "Feelings of insecurity are contributing to the recession."

Kaasik said that different sectors of the economy are faring differently, with the financial sector doing just fine, while the processing industry is struggling. "Export of goods is down in double figures, while services export has done relatively well so far."

"Estonia's is a small and open economy, which we find difficult to prop up ourselves. The recession ending depends on a turn for the better for our main trade partners," Kaasik said.

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