Estonian Economy To Grow By 3.5% In 2018, Central Bank Estimates

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Estonia’s economic growth would be at 3.5% in 2018-2019, but it would slow to 2.5% in 2020, according to forecasts by the Estonian central bank, Eesti Pank.

On Estonia’s high inflation, the country’s central bank wrote on Tuesday, June 26, that the rise in consumer prices peaked at the end of 2017 at close to 4%, but inflation started to fall in early 2018 and is forecast to lower to around 2% by 2020.

The main cause of rapid inflation is fast growth in costs in Estonia, especially the growth in labour costs, which the bank expects to continue increasing in the next years until 2020 at the pace of 6-7%.

The bank’s economists expressed certainty that participation in the labour market will be increased by a rise in the retirement age and in life expectancy, and an improvement in indicators for health, but the Estonian economy would make conditions difficult especially for companies providing low productivity jobs.