Financial Stability Review 2022/1
Russia’s war against Ukraine and the subsequent economic sanctions have increased the risks to financial stability in Estonia. Before Russia invaded, the Estonian economy was expected to grow strongly this year and the financial position of companies and households was considered to be good. The financial position of companies and households was already under pressure in the second half of last year though as inflation increased. As business by Estonian companies in Russia, Belarus and Ukraine has steadily decreased over the years, the direct impact of the war and the subsequent sanctions on the Estonian economy is quite small. However the opportunities for exporting have been reduced, supply difficulties for production inputs are notably larger than they were, and inflation has risen even further. Companies falling into difficulties could leave some households without work and incomes. This means the danger has increased of businesses and households falling into difficulties and having problems repaying their loans.