Economic growth is projected to strengthen gradually. Strong wage growth and falling unemployment will fuel private consumption growth. Exports, however, will be held back by weak economic growth in some of Estonia’s main trading partners and by losses in cost competitiveness due to high wage growth.
The government’s financial position is strong and the fiscal stance broadly neutral. A somewhat looser fiscal stance would raise debt somewhat from its very low level, but would also finance mediumterm fiscal priorities, including active labour market measures, education and infrastructure spending. Further steps to reduce taxes on labour earnings, in particular on low earnings, would also raise potential growth.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.