This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries. The economic situation and policies of Estonia were reviewed by the Committee on 18 January 2022. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 11 February 2022.

Estonia has withstood the pandemic shock better than its peers. Thanks to a large, timely and effective policy response to mitigate the COVID-19 shock, GDP contracted by only 2.7% in 2020, one of the softest contraction in Europe. An acute second wave at the beginning of 2021 did not put the recovery on hold, and GDP is now well above its pre-pandemic level ().

Since its independence, Estonia has made tremendous progress towards greater economic prosperity. Per capita income more than tripled over the past 30 years and the gap to the upper half of  OECD countries has been continuously narrowed (). Estonia enjoys solid institutions, political stability, a strong and credible fiscal policy, as well as a robust financial sector. Its major structural strengths are well recognized, including high educational outcomes, a flexible labour market and a business-friendly regulatory framework. Estonia is also a frontrunner in digital governance and innovation, with the highest number of native ICT unicorns per capita in the world. Stable and secure digital services are in fact one of  the factors that have allowed Estonia to cushion better than others the sanitary and economic shock from the pandemic, as tools such as electronic health records, digital classrooms and a large range of  seamless online services were already in place. A large and timely fiscal response also played a role in stabilising and preserving living standards, and Estonia achieved a solid recovery in 2021.

Estonia has a relatively carbon-intensive economy among OECD countries. The government has committed to reducing greenhouse gas emissions by 70% in 2030 relative to their 1990 levels and is aiming to achieve climate neutrality by 2050. Considerable progress has already been made and almost one third of Estonia’s energy is now produced from renewable sources. However, a deeper transformation will be needed. Estonia has committed to phase out oil shale and will need to diversify its sources of renewable energy. There is scope to substantially reduce the use of fossil fuels in the transport sector and to increase the energy efficiency of buildings across Estonia. To achieve this will require a comprehensive approach that significantly expands carbon pricing, public investment and private-sector incentives. Adopting an inclusive approach will be essential to secure the support of consumers and workers.