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Consumer prices are seen to rise 0.1% in 2015, 1.5% next year and 2.2% in 2017, it appears from Danske's Baltic macro outlook for the fourth quarter.

Although economic sentiment in Estonia has gradually improved since mid-2015 it is still weaker than a year ago which inhibits new investment and private consumption remains the key driver of growth, the bank said.

Estonian exports decreased by 0.8% in the first three quarters of the outgoing year. Exports to Russia at the same time contracted by 36%. Danske believes exports will show a drop of 0.2% this year but grow by 3.2% in 2016 and by 4.1% the year after that.

After a very weak third quarter most economic sectors in Estonia have turned red, Danske observes. The only sectors to have maintained stronger positive growth are those focused on private consumption such as retail trade and services.

At the same time the Estonian labor market is the healthiest in the Baltics. Unemployment is expected to decline from this year's 6.1% to 5.6% next year and to 5.4% in 2017.