According to the Bank of Estonia’s latest forecast, Estonia’s economy is recovering, with growth in 2026 driven by improving export markets and supportive government steps.
Changes to income tax will leave people with more take-home pay, while an increase in government spending will inject additional money into the Estonian economy, the central bank said Friday. Lower interest rates, continued access to bank loans and slowing inflation are also contributing to a more positive outlook.
In 2026, Estonia’s economy is forecast to grow by 3.6 percent, but as fiscal stimulus fades, growth is expected to slow to 2.5 percent by 2028.
The general government budget will fall into a significant deficit next year.
“Excluding the pandemic-era shortfall in 2020, next year’s deficit will be the largest in the last 30 years,” the Bank of Estonia said.
Read more: ERR.EE
