Estonia’s goods exports grew 9% in May, strengthening expectations that export-oriented manufacturers will lead the economy in the second half of 2026.
Aleksandras Izgorodinas, an economist at Citadele Bank, forecasts Estonian gross domestic product will grow 2.2% this year after a 0.1% contraction in 2024 and 0.6% growth in 2025, writes Äripäev. Citadele expects the export-facing parts of industry to lead activity during the remainder of the year even though the overall industrial cycle remains uneven.
The bank’s forecast puts 2026 inflation at 4%, unemployment at 7% and wage growth at 5.8%. The projected rise in wages would therefore exceed consumer-price growth, while the main near-term production impulse is expected to come from companies selling into foreign markets.
Manufacturing growth is concentrated in export sectors
Citadele’s calculations show that total Estonian industrial output on a three-month-average basis fell 3.2% year on year in May and was down 1% in the year to date. Manufacturing output was 2.6% lower than a year earlier, while total industrial activity remained 13% below its post-pandemic peak.
The aggregate figure concealed expansion in several industrial branches. Output increased 13.1% in basic metals, 12.8% in non-metallic mineral products, 9.9% in computers, electronics and optical products, and 4.9% in electrical equipment. The rise in non-metallic minerals was linked to improving construction activity, while electronics and electrical equipment remained among Estonia’s internationally oriented manufacturing segments.
Separate monthly data from Statistics Estonia showed a similar split. Manufacturing output was down 3.5% year on year in May, but fabricated metal products grew 6%, computers, electronics and optical products 7.7%, and electrical equipment 13.7%. The latter two form an established part of Estonia’s electronics manufacturing sector. Statistics Estonia said 65.3% of manufacturing production was sold to foreign markets during the month.
Export growth strengthens Estonia’s second-half outlook
Estonia’s goods exports increased 9% year on year in May to more than €1.7B, while imports rose 4% to over €1.9B, according to Statistics Estonia. Exports of goods of Estonian origin grew 5% and accounted for 62% of total exports.
Electrical equipment was Estonia’s largest export category in May, representing 15% of all goods exports. The country continues to draw investments and international interest amid the global surge in semiconductor, electronics and precise manufacturing demand. Recently. Estonia has been linked as one of the possible growth points for European domestic PCB production. Exports of mechanical appliances increased by €31M, or 25%, while the value of electrical-equipment exports rose 4%. Among goods of Estonian origin, the largest increases came from mechanical appliances and electrical equipment, up €17M and €16M respectively.
Finland remained Estonia’s largest export destination with a 15% share, led by electrical equipment. Citadele noted that economic sentiment in Finland, a key market for Estonian manufacturers, remained resilient during the first months of the Iran conflict, supporting its expectation of firmer industrial demand during the second half.
Domestic demand remains the softer part of the outlook
Citadele said Estonian retail activity in May fell to its lowest level since December 2025 as weaker consumer confidence limited spending. Construction provided a counterweight: first-quarter construction output reached its highest level since late 2023, accompanied by stronger production of cement and other non-metallic mineral products.
The forecast therefore combines a gradual recovery with continued divergence between sectors. Export-facing manufacturers in metals, electronics and electrical equipment are improving, while weaker household demand and declines in food manufacturing and energy production continue to weigh on the headline industrial figures.
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