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After the years 2020–2025, it is clear that the world has not returned to its former stability. Although there were moments when it seemed that the succession of crises might begin to subside, reality has shown otherwise. Both the global environment and Estonia’s economic and political landscape remain uncertain, and achieving sustainable economic growth and security will require consistent, long-term effort in the years ahead.
In recent years, the Estonian economy has faced both headwinds and a few encouraging developments. At times, industrial exports have shown signs of recovery, offering cautious hope that economic growth is possible, albeit uneven. At the same time, domestic demand and household purchasing power have remained weak. Tax increases and a persistently high price level have made Estonia one of the more expensive countries in the European Union for a range of goods and services, while incomes have not kept pace with rising prices. This has accelerated the shift in consumption towards online channels and cross-border purchases, reducing the vitality of the local economy.
Economic growth has been restrained by a combination of factors. The slow development of our key trading partners, Finland and Sweden, investor caution stemming from the geopolitical situation, changes in supply chains, and rising cost bases for companies have created a challenging environment. Rapid wage growth, not always matched by productivity gains, has also weighed on competitiveness. While the state has played a significant role in supporting the economy, a substantial share of public expenditure is necessarily directed towards national defence. As a result, the primary engine of growth continues to rest with entrepreneurs and the private sector. Businesses are ready to take responsibility and invest, but they look to the state for a stable and predictable policy environment and for a reduction in administrative burdens that constrain enterprise.
In summary, the Estonian economy has the foundations for recovery and growth, but this outcome cannot be taken for granted. Results will depend on the development of our main trading partners as well as on the wider geopolitical environment. Equally important is the ability of businesses themselves to invest in innovation, increase productivity, and move towards higher value-added activities and export markets. The long-term improvement of people’s well-being in Estonia can only be built on strong and competitive companies that underpin sustainable wage growth.
Let us therefore act together, thoughtfully and with a forward-looking mindset, to create the conditions for economic growth and a more secure tomorrow. And let us stand united – we are not many!
