According to the latest edition of SEB's Nordic Outlook, the Estonian economy is expected to grow by 3.4% this year, by 3% in 2019 and by 2.8% in 2020. The previous edition included the same forecast growth for 2018 and 2020, but had forecast 3.5% growth in 2019.

"GDP growth decelerated from last year's 4.9% to 3.5% in the first half of 2018," SEB economists said about Estonia. "Growth is being driven primarily by inventories, private consumption, and exports. Strong performance in such sectors as oil and wood products have contributed to a healthy trend in manufacturing, but sentiment indicators and other data point to a slowdown ahead."

According to SEB, weaker growth among primary customer countries is contributing to a slowdown in merchandise exports, although service exports will partly offset this. "The effect of the ongoing tax reform has followed our forecasts, with a relatively moderate reaction for private consumption," they said, adding that this pattern is also likely to remain in 2019, when sizeable tax refunds may go not toward consumption, but rather increased saving.

Capital spending has decreased due to the high comparison base of 2017, but very high construction volumes indicate that these figures may be lifted by revision. A decrease in new construction permits is signalling a gradual slowdown in 2019-2020. Weakening demographics paired with the expected fall in the influx of EU structural funds to Estonia will place further downward pressure on infrastructure investments after 2020, SEB's Nordic Outlook says.

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