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ESTONIA


 



In-depth Business Intelligence 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 8,383 6,413 5,500 95
         
GNI per capita
 US $ 3,870 4,130 3,870 72
Ranking is given out of 208 nations - (data from the World Bank)

Books on Estonia

REPUBLICAN REFERENCE

Area (sq.km) 
45,226 

Population
1,341,664

Principal 
ethnic groups 
Estonians 63.9%
Russians 29%
Ukrainians 2.7%

Capital 
Tallinn

Currency 
Kroon

President 
Arnold Rüütel


Update No: 310 - (26/10/06)

The London-Tallinn axis
The British love an underdog. They have an especial affection for the Baltic states, which they think were shabbily treated by the Soviets in 1940, as indeed they were. 
Those with an historical sense are also mindful of the fact that the British themselves cannot escape all responsibility for the disaster; the notorious Munich settlement in 1938, set up by Prime Minister Chamberlain, led straight to the Nazi-Soviet Pact of 1939. As the Soviet Foreign Minister of the time, Litvinov, said to the French Ambassador to Moscow, Coulondre, half-way through an official reprimand of the same: "My friend, what have you done? This will lead directly to the Fourth Partition of Poland." He might have added also to the USSR swallowing up the Baltic states.
British royalty, which is highly cosmopolitan, multilingual and with extensive family ties with former monarchs of these lands, has taken an especial interest in the Baltic states since their liberation in 1991. The Duke of Kent and his younger brother, Prince Michael of Kent, the very double of the last Tsar, have visited them all. 

The Queen arrives
But in mid-October came the ultimate accolade, a visit from the Queen. The Queen was greeted by Estonia's political establishment and hundreds of citizens on October 19th as she arrived in the capital, Tallinn, on the final leg of her tour of the Baltic countries. 
Hosted by Toomas Hendrik Ilves, Estonia's newly inaugurated president, a welcome ceremony for the Queen and her husband, Prince Philip, was held in front of the presidential palace. The monarch was greeted by Prime Minister Andrus Ansip and his cabinet ministers. 
After a military band played the Estonian and British national anthems, the Queen inspected the Estonian honour guard. 
The royal couple then entered the president's residence, located in the historical Kadriorg park just outside Tallinn's city centre, for talks with Ilves. 
During the brief meeting, the Queen honoured the Estonian president by handing him the insignia of the Knight Grand Cross of the Order of the Bath, the British Embassy said. Created by King George in 1725, it is the fourth-oldest order of knighthood in the British honour system. This is a signal honour, made of course to the Estonian nation, personified by the recently-elected president, by the personification of the British nation, the Queen. The GCB ranks even higher than the Order of Merit.
These things might not seem to matter much. But they do to the Estonians. They have finally arrived in the West where they truly belong.

The economy thrives
To come down to more mundane matters, as is well known, Estonia has generally made an astonishingly successful transition to capitalism. It was the first post-Soviet country to establish its own currency in June, 1992. It took advice from the Bundesbank in doing so. It has not looked back since. 
It has been a pioneer in reform for a wider world with its initiation of the flat tax. It joined the EU in 2004 and is set to join Euroland later in this decade, once its inflation rate, running at 4.4% this year, is below the required 3%.
A difficulty here is that the growth of credit is a very high one of 46.3% at the moment, itself a sure fillip to inflation. It underpins an extraordinary high growth of GDP.

Estonia 2Q GDP rockets 12 per cent
Estonia's economy expanded a mind-boggling 12 per cent from April to July, fuelled by robust domestic consumption and strong growth in exports, the Statistical Office reported on Sept. 4th. 
The data is based on preliminary information, and surpassed analysts' expectations. Hansapank's Maris Lauri said first-quarter statistics showed that the impact of domestic consumption has been growing from quarter to quarter, and this trend apparently continued in the second quarter. 
"Although export has also been growing at a fairly fast pace, strong domestic demand brings in lots of imported goods, which weakens the foreign sector's impact on Estonia's economic growth," Pajula added.
But Estonia's economy has been white-hot, forcing the Finance Ministry to adjust its annual growth figures last month to 9.6 per cent from 8.2 per cent earlier this year. 
Anne Karik-Uustalu, an analyst with Sampo Pank, said the growth was increasingly reliant on strong expansion in the construction and service sectors, while industrial growth figures were somewhat weaker.
Lauri predicts overall economic growth of 9.4 per cent for this year, while Karik-Uustalu expects the economy to grow by up to 10 per cent. 
There may have to be a slowdown next year to moderate inflation. There is nothing more likely to let the inflationary genie out of the bottle than breakneck growth.

Challenges to Estonia's Economic Policymaking 
In the past decade, Estonia has undertaken remarkable and effective efforts to restructure its economy and prepare the factors of production for the challenges of the world market. Estonia proved itself as the reform country of Central and Eastern Europe with the most far-reaching and comprehensive reform package, leading to the fastest structural change in the region. It is fair to state that Estonia has matured enough to become a full member of the European Union.
As one-if not the decisive-part of the reform package, Estonia opted for rule-bound policies, of which there are numerous examples. In monetary policy, it chose the most restrictive regime, with its own currency under the currency board system. In its ten years of existence, the board has provided the stability and liquidity necessary to finance the economic growth necessary to bring its economic welfare to Western European standards. The labour market is organized flexibly with very low minimum wages and almost negligible unionisation. The board has fostered structural change, in particular the retreat of huge parts of the work force from agriculture and their inclusion in the service industries. In this respect, Estonia is far ahead of its Baltic neighbours, albeit with a very high rate of unemployment. Fiscal policy is characterized by the requirement to balance the public budget, at least over a cycle of a few years. Again this rule has proved binding and successful. Finally, the trade regime is unique in Europe-Estonia opted for unilateral free trade in the 1990s. In 1997, all barriers to trade were removed. Estonia has followed the post-World War II German economic policy model.

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ECONOMY

Experts predict stable growth for Estonia's economy 

The Institute for Economic Research recently released a survey of experts and residents on their opinions about the Estonian economy, website baltictimes.com reported. 
Most said they felt optimistic about economic prospects and continued stable growth, and offered several methods to keep it growing. 
The Institute for Economic Research termed the economic situation in Estonia as "favourable," adding that the danger of overheating should not be exaggerated, it was reported. Life has not been better in Estonia since the "ice age," said Heido Vitsur, adviser to Economy Minister Edgar Savisaar. "It's fairly certain that the economic boom will continue for at least the next six months," he was quoted as saying. 
Economic experts surveyed by the Institute for Economic Research largely viewed the state of Estonia's economy as healthy, and 88 per cent appeared to believe the situation six months from now would be at least "as good as today." The current state of investment and private consumption was seen as good by 94 per cent of respondents, while six percent considered the situation to be satisfactory. Seventy-six per cent of the economists surveyed expected exports and imports to grow in the next six months. 
Nobody predicted a decrease. In regard to the trade balance, 12 per cent anticipated a decrease and 29 per cent hoped to see an improvement. The remaining 59 per cent forecasted a continuation of the status quo. Of the Estonian residents surveyed, 11 per cent viewed the economic changes over the past 15 years as very good, 40 per cent as good and 40 per cent as satisfactory. Five per cent considered the changes to be unsatisfactory and only one percent saw the last 15 years as very bad. 

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FOREIGN RELATIONS

Ruutel confirms readiness to maintain dialogue with Russia 

Estonian President Arnold Ruutel has reaffirmed his country's readiness to maintain a regular and fruitful dialogue with Russia. He said this during a recent meeting with Russian Ambassador to Estonia, Nikolai Uspensky, who handed in credentials to the Estonian president, New Europe reported. 
Ruutel said fruitful and mutually advantageous dialogue was possible as both sides showed the presence of political will. Uspensky said, in his turn, that Russia was open for further development of political contacts with Estonia. The Russian diplomat called for making more political success on the basis of good experience in bilateral cooperation existing in economy, culture and other spheres.

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