Analytics, Banks, Economics, Estonia, GDP

In 2016 Estonia's economy is expected to grow 1.5% and next year 2.5%t. Next year's GDP real growth is to total 2.7%.

"The import demand of our trade partners is to improve and increase the export opportunities of companies," chief economist at Swedbank Tonu Mertsina said when introducing Swedbank's fresh Economic Outlook on Monday.

According to Mertsina exports should be supported by an increase in external demand. "The import demand of our trade partners is to improve and increase the export possibilities of companies," Mertsina said.

He also said that interest rates are still low and favor investing. Wage growth is to remain fast in coming years, but a deceleration in households' purchasing power growth is still slowing down consumption.

The analyst also predicts that wage growth is to continue. "Wage increase is to remain fast, around 5-6% in coming years as finding new employees is still complicated for companies. But the real increase of employees' purchasing power is to slow down in 2017-2018 because the nominal wage increase is to slow down a little, prices will rise and the decline in the tax burden of employees will be smaller than in 2015. In our opinion, this could restrict private consumption growth next year," Mertsina said.

According to the analyst, employment growth has been surprisingly high this year.

This year inflation is to total -0.1%, while next year consumer prices should once again start growing and inflation is to total 2.5%. In 2018 inflation is estimated to total 2%.