While Estonia's 4.9 percent GDP growth in 2017 surpassed all expectations, the bank now expects that growth will move closer to long-term potential. It will also be better balanced, driven by both domestic demand and exports. While many institutions have revised their forecasts upward, SEB is taking a slightly more cautious position in light of recent data and is leaving its GDP growth forecast unchanged at 3.5 percent in 2018 and three percent in 2019, the bank said in its fresh Nordic Outlook.

According to SEB, private consumption will increase 4.3 percent this year. The impact of the income tax reform on the growth of consumption was weaker than expected, but many other factors support a continued increase in purchasing power.

The bank foreacasts that the growth of the harmonized index of consumer prices (HICP) is to amount to slightly over three percent this year, which is 0.2 percent less compared to its previous forecast, and 2.5 percent in 2019.

Regardless of the fact that growth in manufacturing has been decelerating and export growth in March 2018 even fell to a deficit, SEB expects strong export growth of more than four percent both in 2018 and 2019.