Financial Stability Review 2/2021
The Estonian economy as a whole has recovered from the Covid-19 pandemic, which is easing the danger that the restrictions on economic activity caused by the pandemic could have a significantly harmful impact on financial stability. Although some sectors have not recovered yet, the economy as a whole has returned to its pre-crisis level. The increasing sales turnover and profit of businesses has started to reduce unemployment and raise the average wage faster. The share of overdue loans or loans on payment holidays has shrunk considerably and the banks have reduced the provisions they made to cover possible loan losses. This is supporting the profitability and capitalisation of the banks and their capacity to finance the economy. If the increasing spread of the virus should however lead to major additional restrictions on the economy, the risks to financial stability could become more serious.