Economic growth slows in the fourth quarter of 2025

Economy ends 2025 on a weak note: Estonia's GDP expanded 0.7% on a year-on-year basis in Q4, following 1.1% growth in the prior quarter. On a seasonally adjusted quarter-on-quarter basis, economic output shrank 0.1% in Q4, following a 0.1% expansion in the prior quarter. In 2025 as a whole, GDP grew 0.6%, which marked the first expansion since 2021 (2024: -0.1%).

Domestic demand decelerates in Q4: Compared to the previous period's data, readings in Q4 softened for government consumption (+3.1% in annual terms vs +3.4% in Q3), exports of goods and services (+4.7% vs +4.8% in Q3) and imports of goods and services (+3.1% vs +6.2% in Q3). Meanwhile, the variation in private consumption was the same as in the prior quarter (-0.4% in Q4 and Q3). Lastly, the reading for fixed investment improved in Q4 (+6.9% vs -0.5% in Q3).

Panelist insight: EIU analysts said: “We may revise down our 2.4% real GDP growth forecast for Estonia in 2026, but will be closely watching developments relating to the conflict before acting. This reflects the impact of the conflict involving Israel, the US and Iran, which has pushed up global oil and gas prices. Although Estonia has eliminated its previous reliance on Russian gas, it remains reliant on global hydrocarbons imports.”

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