Bigbank lowers Estonia's economic growth forecast to 1.7%

Estonia's economic growth forecast for the year has been reduced to 1.7%, down from the initial projection of 2.3%, according to Bigbank's chief economist Raul Eamets. The bank also revised its inflation forecast upwards, now expecting the consumer price index to rise by 5% instead of the previously predicted 3.2% at the start of the year.

Eamets anticipates the 6-month Euribor, a benchmark for most Estonian home loans, to reach 2.65% by the end of the year. He pointed to recent events in the Middle East and the ensuing oil crisis as significant factors impacting the global economy.

These geopolitical developments are expected to have a more pronounced effect on prices in the autumn and into 2027. Eamets highlighted that consumers can anticipate higher costs for fuel and gas, as well as increased prices for plastic and textile products derived from oil. Additionally, rising fertilizer costs will likely drive up food prices, and the cost of computer chips is also projected to increase.