The June assessments of economic analysts at the Estonian Institute of Economic Research (EKI) show that the general situation of the Estonian economy is currently poor. The impact of the COVID-19 pandemic on human health is declining somewhat, but the impact on the economy is likely to intensify in the coming months.
In June, the expert panel of the EKI assessed the current state of the Estonian economy to be poor: 86 points (on a scale of -100 to +100). Similarly, both investment situations and private consumption were assessed as poor.
Expert evaluation show that in half a year, i.e. by December 2020, the general situation of the Estonian economy is better than now. “We can conclude from expert assessments that the peak of the economic crisis caused by the COVID-19 will be exceeded this year in case the second wave of the virus does not arrive,” said Marje Josing, the general director of the Estonian Institute of Economic Research. “With regard to investments, the vast majority of experts anticipate the same situation, but the state may deteriorate as a whole. However, in half a year the consumption situation is clearly better than today,” Josing added.
With regard to the change in inflation levels in the coming 6 months, experts are predominant in predicting a slowdown in price rises. The level of inflation in 2020, experts predict 0,2% and in 2021, 1,8%. Prices for domestic shares may increase slightly.
The business barometers survey reveals that in June the biggest problem for Estonian businesses was lack of demand. “While there is already a slow economic recovery in the service and trade sector, the shortage of demand has even increased compared to the March survey, as the crisis increasingly reaches the industrial and construction sector. Fever orders also entail the need for employees to reduce wages, as mentioned by 44% of companies in June. Every fourth company has also had to aggregate workers,“ said Josing.
The economic crisis has not yet significantly affected the financial situation of families. The majority (68%), of the families who participated in the survey in June assessed that their economic situation was the same as 12 months ago. Compared to the previous year and three months ago, there are fewer families whose economic situation improved. The majority (71%) of the families appreciate that their economic situation is the same in 12 months, while the state's economic situation is seen to be deteriorating. Families try to save more and reduce the purchases of durable goods. Unemployment is rising.
The food basket was inclined to 1.9% in the II quarter. In the annual comparison, food costs increased by 2%.