Data from Statistics Estonia shows GDP decreased by 0.7 percent on year in the third quarter. In the second quarter, it was slightly higher at 1 percent. The economic decline is slowing.

"We have weak external demand, weak internal demand — people are not spending, and production costs for businesses have risen. When you combine these effects, you get a situation that drives the economy downward," said LHV Bank analyst Triinu Tapver.

"Export markets have not recovered, though there are small signs of improvement," she added.

2024's GDP is expected to be negative overall. Tapver estimates that modest economic growth could begin next year.

"We hope export markets will gradually recover, which could have a positive effect on the economy. Similarly, people's incomes will grow slightly, but tax increases will reduce purchasing power next year," the analyst noted.

In the third quarter, construction and manufacturing were the main negative contributors to Estonia's GDP, with trade also playing a significant role. Together, these sectors are among the largest contributors to GDP.

Friday's "Aktuaalne kaamera" spoke to businesses in the sector to find out how they are coping.

Eesti Kraanavabrik, which produces industrial lifting solutions for both domestic and international clients, recently invested in a large industrial crane to enhance the company's added value.

"Investments are still being made in Estonia, and there is some anticipation of positive developments or preparation for growth. Our clients can be divided into two main groups. There are industrial companies whose primary customers are in Finland, Sweden, and the broader Nordic region — these companies seem to have less work at the moment. However, those in a better position are the companies that have moved up the value chain closer to the end customer or toward Germany," explained Rain Johanson, CEO of Eesti Kraanavabrik.

Tarmo Pohlak, a member of the Nordecon management board, said the Estonian construction sector has only just reached its low point.

"The entire economy has been declining for two and a half years, and this is now gradually reaching the construction sector. While it may appear that there are many cranes in the city, this is somewhat misleading, as these are the result of long-term contracts signed a year or a year and a half ago, which are being fulfilled now. Looking ahead, there is little to be optimistic about. /.../ We are likely to fall further, given the overall economic situation we are currently in," Pohlak said.

The economy started to worsen at the end of 2021 and declined rapidly until early 2023 when it slowed.

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