Country Report Estonia 1st Quarter 2015

Country Report Estonia 1st Quarter 2015

Outlook for 2015-19

  • The coalition of the liberal Reform Party and the centre-left Social Democratic Party (SDE) has a slim majority in the Riigikogu (parliament).
  • Parliamentary elections are scheduled to take place in March 2015. We expect that Reform will either continue in coalition with the SDE or form a new government with the conservative Pro Patria-Res Publica Union (IRL).
  • The estimated state budget surplus of 0.5% of GDP in 2014 is likely to be reduced in 2015 as spending rises in the first quarter ahead of the election.
  • Russia's takeover of Crimea in March 2014 will have a lasting effect on NATO's stance towards the country, and security will remain at the top of Estonia's political agenda for some time.
  • The mutual sanctions applied by the EU and Russia have hit Estonian farmers, and have damaged the economic outlook for key trade partners.
  • Consumer spending will remain a key economic driver, although the strength of the economic recovery from 2015, aided by euro weakening, will be contained by weaker external prospects.
  • The Economist Intelligence Unit expects a mild acceleration in real GDP growth, to 2% in 2015, after estimated 1.8% year-on-year growth in 2014.
  • The current-account deficit is estimated to have narrowed in 2014-15. Thereafter, the external gap will widen again as the domestic recovery boosts imports.


  • At its meeting on January 22nd 2015 the European Central Bank (ECB) announced that it would start purchasing sovereign bonds in March 2015. In total, the ECB will purchase assets worth EUR60bn (US$67bn) each month.
  • The price of Brent Blend, the global oil benchmark, fell by more than 60% from its 2014 peak in June, to less than US$46/barrel in mid-January 2015. Estonia's consumer price index declined by an annual average of 0.1% in 2014.
  • The prime minister's economic adviser, Maris Lauri, replaced Jurgen Ligi as finance minister in November 2014. Mr Ligi was forced to resign over comments he made about the education minister on a social media website.
  • The Bank of Estonia (BoE, the central bank) delayed imposing new rules for mortgage lending until March 2015. These include an 85% limit on the loan/value ratio and a 50% limit on the debt service/income ratio.
  • Real GDP increased by 2.2% year on year in the third quarter of 2014, up from 2% in the second. Strong foreign demand has supported industrial production, which increased by 4.9% year on year in November, up from 2.6% in October.

Country Report Estonia 1st Quarter 2015
Outlook for 2015-19: Political stability
Outlook for 2015-19: Election watch
Outlook for 2015-19: International relations
Outlook for 2015-19: Democracy index: Estonia
Outlook for 2015-19: Policy trends
Outlook for 2015-19: Fiscal policy
Outlook for 2015-19: Monetary policy
Outlook for 2015-19: International assumptions
Outlook for 2015-19: Economic growth
Outlook for 2015-19: Inflation
Outlook for 2015-19: Exchange rates
Outlook for 2015-19: External sector
Outlook for 2015-19: Forecast summary
Data and charts: Annual data and forecast
Data and charts: Quarterly data
Data and charts: Monthly data
Data and charts: Annual trends charts
Data and charts: Monthly trends charts
Data and charts: Comparative economic indicators
Basic data
Political structure

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