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Economy

Currency: ESTONIAN KROON/EURO FROM 01/01/2011
Exchange rate: 15,64 Estonian Kroons for one Euro.

Estonian Economy is characterized by a strong and steady growth. From 2000 to 2006 GDP pratically doubled. The country is at 20th place in the world for competitiveness (WEF's Ranking). The country risk drawn up by OECD correponds to 2 on a 1-to-7 scale .

The process of harmonisation with the other EU members is favored by a real growth rate which in 2006 was around 12% with a consequent 10.8% increase in GDP concerning the same period. The transformation of the Estonian economy dates back to the acquisition of independence in 1991.
After a period of recession in the three following years,  mainly due to the loss of the principal export market (Russia) - there has been a real boom accompanied by a marked reduction of State intervention in economic matters.

It is a good result for a small Country that shortly after the Fall of Berlin Wall was on the verge of bankruptcy.

After the Declaration of independence in 1991, there was a massive program of privatization. In less than ten years over 1,500 companies have passed from Statae to private property. Entire sectors such as energy, telecommunications, transport were submitted to a policy of liberalisation.

All this was made possible by the significant inflow of foreign capital that have accompanied the complex transition from statist economy to free market. Subsidies to industry and agriculture were gradually eliminated. Agricultural sector knew a phase of involution mainly due to the slump in demand from Russia and former Soviet countries.

The industrial sector, in particular the one related to the chemical industry and paper processing, was replaced by mobile telephony and computing industry. Finnish and Swedish influence in these areas  played a decisive role in the country's economic growth.

Other important industries are those related to timber production and livestock.

Today the main economic activity is represented by tourism and services (Tallinn). The industrial sector is important, too, and it is mainly composed by small and medium-sized companies. Another important factor for the economy of Estonia consists on foreign investment attracted by zero tax on corporate profits. Banking and insurance are developping. The Tallinn Stock Exchange belongs to Omx group, together with Helsinki, Stockholm and Riga ones.

In addition to the Baltic countries, Estonian major trading partners are Sweden and Finland.

ESTONIA-ITALY TRADE

Trade relations between the two countries are modest but growing. Italy is AT ninth place among Estonian suppliers, with a ammount corresponding to 2.8%. Italian companies have exported to Estonia, machinery, textiles, means of transportations, but also building materials, chemicals and leather goods. Food (suc as pasta, olive oil, wine and cheese) have an increasing role in Italian export towards Estonia. There also are commercial initiatives as far as concerns real estate, brokerage and catering. In particular, Italian restaurants with Italian management are quite numerous in Tallinn. In general we can say that, from 2003, Italian exports towards Estonia have doubled.

 


Interchange Italy - Estonia
Trend 2007-2008-2009

 

2007
in €
2008
  in €
2009
  in €
Export 392.383.057 363.246.540 198.529.815
Import 75.982.318 102.053.440 76.816.087
Balance 316.400.739 261.193.100 121.713.728

Socurce: Istat January-December 2009 (update in July 2010)

Country Risk
In the Country Risk Ratings, whose last update was made in december 2007, Estonian risk corresponds to 2 on a 1-to-7 scale (OCSE Category). Low risk.

 

  2008a 2009b 2010c 2011c
GDP        
Nominal GDP (milions of US$) 23.516 19.268  19.313 19.429 
Nominal GDP (milions of EEK)  251.493  216.037    212.435  217.528
Real GDP growth rate (%)
 -3,6  -14,0  -2,0  1,2
Expenditure on GDP (%)        
Private Consumption  -3,8  -18,0  -4,5  2,0
Public Consumption  4,4  -5,0  -6,0  1,0
Fixed investment  -8,6  -35,0  -5,0  2,0
Export of goods and services
 -1,1  -17,0  -3,0  1,5
Import of goods and services  - 7,9  -27,5  -2,0  2,0
Origine of GDP  (% reale)        
Agricolture 6,3   0,8  1,0  1,2
Industry   -4,8  -26,5  -1,4  -0,9
Services  -3,1  -9,0  -2,3  1,9
Demographics and income
       
Population (Millions)  1,3 b  1,3  1,3  1,3
Per capita GDP (PPP US$  30.341b  17.958  17.873  18.333
Employment rate (average %)  5,5  13,6  14,0  12,8
Fiscal indicators (% of GDP)        
Revenue in State sector  37,1  38,2  37,7  38,3
Expenditure in State sector  39,9  42,2  40,7  40,8
Balance State budget
 -2,7  -4,0  -3,0  -2,5
Public debt
 4,7  7,5  9,1  10,2
Prices and financial indicators
       
Exchange rate EEK-US$ (media)  10,69  11,21  11,00  11,20
Exchange rate EEK-€  15,65  15,65  15,65  15,65
Consumer prices (average; %)  10,4  -0,1  0,3  1,2
Production prices (average; %)
 7,1  -0,5  1,6  1,9
Interest rate on loans
 6,7  6,0  5,7 5,4
Current accounts (US$ mln)        
Trade balance
 -2.759  -558  -843  -881
Goods: export fob  12.570  8.555  8.713  9.109
Goods: import fob  -15.329  -9.113  -9.556  -9.991
Balance of services
 1.749  1.627  1.716  1.772
Balance of income
 -1.499  -700  -900  -1.500
Account balance transfer
 273  250  250  300
Current account balance
 -2.236  619  223  -309
International reservers (US$ Billions)        
Total of Internationa Reserves
 3,972  3,803  3,941  4,158

a Present, b Estimates of Economist Intelligence Unit, c Forecast of Economist Intelligence Unit
Source: IMF, International Financial Statistics

Tallinn

Tallinn, the capital of the Republic of Estonia, is a city with distinctly medieval features.

Tartu

Tartu is a university town crossed by the Emajogi River located in the south-eastern part of the country.

Pärnu

The city owes its name to the homonymous river running through it before flooding in the Baltic Sea.

Helsinki

Capital of Finland, Helsinki is a city of small, strategically placed between East and West.