According to the bank's forecast, Estonia's GDP is expected to grow 2.2 percent this year and 2.8 next year. Household consumption is to grow 3.2 percent this year and 3.8 in 2018, while consumer prices are expected to increase 3.2 and 2.6 percent, respectively.

According to the economic outlook, the real growth of net wages is to total 3 percent this year and 8.8 percent next year.

The export of goods and services is expected to grow 5.4 percent this year and 5.5 percent next year, while imports are expected to grow 8.1 and 5.4 percent, respectively — an increase of 2.6 and 0.7 percent over its winter forecast figures.

Work capacity reform to increase unemployment

Swedbank forecasts that Estonia's unemployment rate is to total 7.6 percent in 2017 and climb to 7.9 percent in 2018, an increase of 0.1 and 0.2 percent, respectively, over its January forecast.

While the work capacity reform is to reduce the number of nonactive people in the near future, it will also increase the number of unemployed people in Estonia.

"The number of vacant positions has constantly increased and the scarcity of labor has become a more and more serious problem," said Swedbank Estonia's chief economist Tõnu Mertsina in the bank's press release. "We expect the number of people who are not actively looking for work due to studies, old age, poor health or raising children to decline this year and next year. Labor shortage as well as the rising pension age and the work capacity reform are to affect the decline of nonactiveness. The latter will result in the number of unemployed people rising."