In Q3 2024, Estonian GDP dropped 0.7% y/y in real terms, while it increased 0.1% q/q (seasonally and working day adjusted – swda), according to the flash estimate of Statistics Estonia. The estimate met our expectations.
Estonia has left economic recession behind, based on the preliminary, GDP flash estimate. Manufacturing output volume is still declining, while export of goods and services has turned to growth. Energy production, that contributed the most (roughly half) to the GDP decline in 2023, is improving. Despite real wages are growing already since the middle of last year and falling interest rates have brought some relief to the households with loans, retail trade volume is still falling. Swedbank card payments suggest that private consumption was weak in Q3. Economic confidence has made only minor improvement and is still below the long-term average.
We expect that the Estonian economy will continue to improve in Q4, but it will decline in the full year of 2024. Government fiscal consolidation will reduce the GDP growth in 2025 and 2026, while improving foreign demand and falling interest rates will be a tailwind to the growth.
