Country Report Estonia 4th Quarter 2015

Country Report Estonia 4th Quarter 2015

Outlook for 2016-20

  • 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, but with a renewed emphasis on security, following the Ukraine-Russia conflict.
  • The European-wide migration crisis is a new development that could accentuate divisions within the EU, compromising the bloc's ability to act effectively on the international stage.
  • 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.
  • We expect the EU's economic sanctions on Russia to be renewed again for six months in January 2016. Although this will continue to 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.
  • Growth in jobs and the real wage, amid falling inflation, will sustain domestic demand in 2015. We estimate real GDP growth of 2% in 2015, and forecast that GDP growth will rise to average 3.2% in 2016-20.
  • We estimate average consumer price deflation (national measure) of 0.4% in 2015. Thereafter, inflationary pressure will come from key import partners, as well as a broad weakening of the euro.


  • In September Eston Kohver, an Estonian security officer, was freed by Russia in exchange for a local official jailed in Estonia for spying for Russia.
  • In July Estonia agreed with the EU to take in small numbers of refugees over the next few years.
  • In October Estonia, along with Latvia, Lithuania and Poland, reached an agreement with the European Commission on financing a connection between the Baltic gas networks and those of central and western Europe.
  • In the third quarter growth in retail sales volumes remained strong, at above 8% year on year. In contrast, manufacturing production continued to drop.
  • In September deflation deepened again, to 0.7% year on year, owing to low global energy costs. In late October 2015 the euro stood at US$1.1:EUR1.

Country Report Estonia 4th Quarter 2015
Outlook for 2016-20: Political stability
Outlook for 2016-20: Election watch
Outlook for 2016-20: International relations
Outlook for 2016-20: Policy trends
Outlook for 2016-20: Fiscal policy
Outlook for 2016-20: Monetary policy
Outlook for 2016-20: International assumptions
Outlook for 2016-20: Economic growth
Outlook for 2016-20: Inflation
Outlook for 2016-20: Exchange rates
Outlook for 2016-20: External sector
Outlook for 2016-20: 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