According to Swedbank, the Estonian economy will return to growth in 2025 after a 0.8% contraction in 2024. GDP growth is projected at 1.5%, and in 2026 the economy may accelerate to 2.5%.
The main growth factors are export recovery and increased investment.
At the same time, household consumption in Estonia will remain relatively weak due to higher taxes and slower growth in real incomes. Inflation will reach 4% in 2025, which is higher than the euro area average. This is mainly due to tax policy and additional household spending.
Despite economic challenges, the labor market in Estonia remains resilient. The employment rate exceeds 69%, which is one of the highest in Europe. However, the rapid growth of wages is outpacing productivity growth, which poses additional risks to the competitiveness of the economy.
