Country Report Estonia 3rd Quarter 2015

Country Report Estonia 3rd Quarter 2015

Outlook for 2015-19

  • Following the parliamentary election on March 1st 2015, the centre-right Reform Party was returned to office in a three-party coalition government with the Social Democratic Party (SDE) and Pro Patria-Res Publica Union (IRL).
  • The Economist Intelligence Unit expects broad policy continuity, although political stability may be compromised by the increased parliamentary presence of the Centre Party and the Conservative People's Party (EKRE).
  • Although we expect a return to modest budget deficits from 2015, the deficit will remain close to balance throughout the forecast period. Government debt is low and will be kept in check.
  • 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.
  • We expect the EU's economic sanctions on Russia to be renewed again for six months in January 2016. Although this could dampen the prospects for Estonian agriculture, trade reorientation away from Russia will continue.
  • Despite the deal made in July to keep Greece in the euro zone, we still expect Greece's departure from the bloc in the medium term. Estonia will continue to position itself as part of the fiscally responsible core, alongside Germany.
  • Jobs growth and some fiscal loosening will sustain domestic demand in 2015, while a pick-up in Sweden and a weak euro will sustain exports. We forecast real GDP growth of 2% in 2015, rising to average 3.2% in 2016-19.
  • We forecast average consumer price growth in Estonia at just 0.1% in 2015. Thereafter, inflationary pressure will come from key import partners, as well as a broad weakening of the euro.


  • In July an agreement with the EU to take in 150 refugees stirred protests in Estonia. The trial of Eston Kohver, an Estonian security officer who was detained by Russia in 2014, was set to begin in Russia at the end of the month.
  • In June the EU renewed its sanctions on Russia, and Russia has extended for a year its ban on imports of Western food imports. In July a deal was struck to keep Greece's financial system afloat and the euro zone intact.
  • In the first quarter of 2015 real GDP growth slowed to 1.1% year on year. Since then industrial performance has weakened, but the trend in export earnings in euro terms has remained steady, and retail sales strengthened in June.
  • In July the pace of decline in the consumer price level picked up to 0.35% year on year, and to about the same rate month on month.

Country Report Estonia 3rd Quarter 2015
Outlook for 2015-19: Political stability
Outlook for 2015-19: Election watch
Outlook for 2015-19: International relations
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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