The commission says this year's decline is related to the continued drop in exports and investments.

In 2025, GDP growth should rise to 3.1 percent as rising wages will affect private consumption. Export growth will increase due to the economic recovery of Estonia's main trading partners.

Inflation in Estonia accelerated at the beginning of 2024 due to the increase in the VAT rate, but will then decrease. Inflation will be 3.4 percent this year, but fall to 2.1 percent next year.

The government sector's budget deficit will remain at 3.4 percent of GDP in 2024. In 2025, the commission says it will rise to 4.3 percent as the personal minimum income tax exemption will be removed, but compensatory measures have not yet been agreed.

Government debt is forecast to increase to 24.6 percent of GDP in 2025.

Estonia is the only EU country that will see a decline in GDP this year. Latvia's is forecast to grow by 1.7 percent, Lithuania's by 2.0 percent, Sweden by 0.2 percent and Finland's will stay the same.

GDP will grow by 1.0 percent in the European Union and 0.8 percent in the euro area this year. 

In 2025, GDP growth will accelerate to 1.6 percent in the European Union and 1.4 percent in the euro area.

Estonia's economic growth in 2024 will be lower than the EU average but higher in 2025.

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