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UPDATE January 2002

Estonia is undoubtedly a star turn among transition economies. It has had the huge advantage of being just across the Gulf of Finland from Finland, with which it shares many cultural and linguistic ties. Protestant in religion and independent in spirit, its people have taken to capitalism like a duck to water.
Its success is not just that it has grown rapidly at around or over 5% per annum for years now, but that it has in the process reduced the deficit of the central government from 4.6% of GDP in 1999 to 0.7% in 2000. In December 2000, parliament approved a balanced budget for 2001.
Its big problem, however, is that it has a current account deficit of 7.2% for 2001 and a prospective one of 6.8% for 2002. Its inflation rate according to the IMF, is expected to decline from 5.7% in 2001 to 3.8% in 2002, putting it in a good position to join the Euroland shortly after EU entry, itself likely in the first wave of entrants.
Estonia has attracted a large amount of foreign investment, its FDI per capita being in excess of US$1,000. This has been a key to its success. The way forward, according to the latest EBRD report on its economy, is to integrate its stock exchange with that of Finland, its greatest FDI partner, and to continue the good work it has already done in preparing its economy for accession to the EU.
In some ways it is more liberal in its ways than the EU, very little agricultural support, open markets, a highly competitive business climate and a general ethos in favour of enterprise. Fifty years under communism at least left its people with one conviction - capitalism may have many flaws, but it's better than anything else on offer.

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FINANCIAL NEWS

Estonian central bank sees introduction of euro in positive light

According to the analysis of economic influence of the euro made by the Bank of Estonia, the introduction of euro cash in 12 European countries in 2002 will have a positive impact on the Estonian economy and will not cause inflationary pressure on retail trade. The transmission of possible inflation in the euro region in 2002 to Estonia is not likely - mainly because of the locality of possible retail inflation and the relatively low retail turnover with the euro region. 
The Bank of Estonia told ETA News Agency that, according to most analysts and institutions, the fear of accelerating inflation in the euro region was baseless and the price rise at the beginning of 2002 would be very small. It is expected that the euro will increase price transparency in the whole euro region, intensify economic integration and create a basis for faster long-term economic growth... One euro is equal to 15.6466 Estonian kroons.

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FOREIGN ECONOMIC RELATIONS

Forelia in JV with Estonia

Estonian Environment Minister, Heiki Kranich, and Finland's, Forelia Oy have signed founding documents of AS Eesti Metsataim Estonian Forest Plant Ltd. According to BNS reports, the owners of the future joint venture will be the state of Estonia with 60 per cent and Forelia Oy, which belongs to the Finnish state-owned profit organisation Metsahallitus, with 40 per cent. 
The purpose of the company is to start production in Estonia on the basis of a new technology of quality seedlings for renewing forests and afforesting idle farming land, the Environment Ministry reported. The future firm will have US$1.13m in stock capital. Forelia will make a monetary contribution equalling eight million kroons.

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SHIPPING

Estonian largest passenger ship nears completion in Finnish shipyard

A Finnish shipyard will launch on 14th December a passenger ship ordered by Hansatee Grupp. The vessel will be the largest Estonian passenger ship. The ship will accommodate 2,500 people and start sailing on the Tallinn-Helsinki route next May, Hansatee Grupp spokesman, Tiina Mander, said, ETA News Agency has reported. 
The ship has also 1,000 linear m. of cargo room. The cost of the ship is around 2.6bn kroons. Mander said that the ship's naming ceremony will take place shortly. 
The ship is 193.8 m. long and 29 m. wide. It has 3,160 seats, 727 cabins and 2,178 beds. The ship is powered by four diesel motors, with full capacity of 26,240 kW and can develop a speed of up to 22 knots. 
The Finnish company, Aker Finnyards, built the ship which will get its final touches in May. AS Hansatee Grupp is the largest Estonian shipping company, according to sales figures...

Estonia aims to build up pilot service, acquire 10 boats over next 10 years

A brand new, 8m-kroon (US$0.46m) pilot boat arrived in Estonia from Finland recently, being the first modern boat of the Estonian sea pilot service.
The boat is equipped with modern navigation devices, Lembit Motlik, board member of the AS Eesti Loots (Estonian Pilot) company and chief of its navigation service, told BNS News Agency.
The new boat, Ahto-006, was built at the Marine Alutech plant in Finland and has a maximum speed of up to 24 knots, compared with 10-15 knots of the boats currently in use in the country's main sea port of Muuga east of Tallinn.
Of the six similar boats built by the Finnish company earlier, one is in service in Finland and five in Sweden.
The new boat will serve Muuga port, where the traffic of ships is most intense and pilot ships must sail in the open sea to reach ships about to enter the harbour.
AS Eesti Loots has launched a public procurement tender for the purchase of three more pilot boats for a total of nearly 25m kroons in spring 2003. Over the next 10 years the Estonian pilot service plans to acquire 10 new vessels.
The requirements for the boats include suitability for serving both large cargo carriers and cruise ships, and ability to operate in unbroken ice with a thickness of up to 10 cm.
The pilot service currently has 15 boats, the oldest of which was built in 1955 and four others in the 1960s.

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TELECOMMUNICATIONS

AT&T offers communications services to Estonian clients

The second-largest global telecommunications firm AT&T wishes to offer data communications services to Estonian business clients, concentrating on the subsidiaries of international firms in Estonia, reports LETA News Agency.
AT&T is to invest 1.2m kroons in Estonia for this new business launch. AT&T registered itself in Estonia as a data communications firm under the name AT&T Global Network Services Estonia. "We wish to offer data communication services to international firms active in the Estonian market whose head offices are located elsewhere and branch offices all over the world," Manager of AT&T Global Network Services Finland, Oy Jorma Piispa, stated. "According to current plans we will launch full-scale operations from January 1st," Piispa added. 

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