Swedbank: Situation in Estonia's economy, labor market slowly improving

TALLINN - The situation in the Estonian economy and labor market is slowly improving, Liis Elmik, senior economist at Swedbank Estonia, said on Friday.

"Economic growth is supported by exports, which are on an upward trend thanks to higher external demand, and investments, which are growing in the wake of lower interest rates. The upturn in the economy is also reflected in the increase in borrowing among both individuals and companies," said Elmik.

She noted that accelerating economic growth is in turn leading to an improvement in the labor market situation, with more jobs created and unemployment declining. The labor force survey published on Friday by Statistics Estonia also shows a drop in the number of unemployed.

"Registered unemployment is at its lowest level in the past five years. The number of redundancies is lower than before. Registered unemployment is highest in East-Viru County and Valga County, and lowest in Hiiu County and Pärnu County. Among the unemployed, the largest share are people with secondary or basic education who have previously worked either in trade or in construction," Elmik said.

The employment register meanwhile shows more employees than a year ago. Over the past year, the largest increases in jobs have been in healthcare, tourism, and education. There are fewer jobs in trade, transport, and construction. According to a survey by the Institute of Economic Research, the construction sector plans to hire more workers in the coming months, while in trade employment continues to decline.

Swedbank forecasts an unemployment rate of 7.7 percent for Estonia for this year and 6.9 percent for next year. The growth of the average gross salary is expected to remain around six percent both this year and next year.