ESTONIA


A small and heavily forested country
The most northerly of the three Baltic republics of the former Soviet Union

Total area: 45,226 sq km
Population: 1.3 million
Government type: Parliamentary democracy
Administrative division: 15 counties (called “maakond”)
Capital + other major cities:Tallinn (412,000) + Tartu (103,000), Narva (66,000), Parnu (44,000), Kohlta-Järve (38,000)
Currency: EUR - on 1 January 2011, Estonia replaced the Estonian kroon (EEK) with the euro.
Languages: Estonian (official) 68.5%, Russian 29.6%, Ukrainian 0.6%, other 1.2%
Ethnicity: Estonian 68.7%, Russian 24.9%, Ukrainian 1.7%, Belarusian 1%, Finn 0.6%, other 1.6%, unspecified 1.6%
Religion: Evangelical Lutheran 9.9%, Orthodox 16.2%, other Christian (including Methodist, Seventh-Day Adventist, Roman Catholic, Pentecostal) 2.2%, none 54.1%, unspecified 16.7%
President: (Ms.) Kersti Kaljulaid (since 10 October 2016)
Prime Minister: (Mr.) Jüri Ratas (since 23 November 2016)
Date of EU accession: 1 May 2004
mapa



KEY FEATURES

  • The least populous state of the EU
  • Advanced, high-income economy
  • One of the most wired countries in Europe
  • 4th freest economy in Europe
  • Has the highest number of startups per capita in Europe
  • Public transport is entirely free for residents of the Estonian capital Tallinn

MACROECONOMIC OVERVIEW

Estonia, a member of the European Union and the eurozone since 2004, has a modern market-based economy and one of the higher per capita income levels in Central Europe and the Baltic region. Estonia's successive governments have pursued a free market, pro-business economic agenda and have wavered little in their commitment to pro-market reforms. The current government has followed sound fiscal policies that have resulted in balanced budgets and low public debt.

After its recovery from the crisis, Estonian growth was affected by an unfavourable regional situation (European sanctions against Russia and the following counter-sanctions). GDP growth, at 4.9% in 2017 (the fastest growth in five years), stood at 3.7% in 2018, driven by domestic demand and a raise in wages (IMF). However, GDP growth is forecasted to moderate to 3.2% in 2019 and 3% in 2020 (2.7% and 2.4% respectively according to the European Commission outlook).

This Baltic republic has managed to move from a state-run and centralised economy to a dynamic market economy, liberalised by a succession of governments observing strict budgetary orthodoxy and modernising the country. The country has stood out, mainly thanks to its IT sector (the invention of Skype, mobile payment systems, internet voting, multifunctional electronic identity cards and initiatives in the sphere of cyber security), as well as its performances in the green energy sector. Furthermore, Estonia enjoys relative energy independence through the exploitation of shale oil, of which the country is one of the world's largest producer and which covers a large part of its electricity needs.



Selected economic indicators, Estonia, 2012 - 2018

    2012 2013 2014 2015 2016 2017 2018
GDP
Real GDP growth
%
5.2
1.6
2.9
1.1
1.9
2.1
4.9
GDP at current prices
€ bn
18.00
19.01
19.96
20.46
21.68
23.61
25.65
Foreign trade
Exports
€ bn
15.59
16.50
16.75
16.32
16.82
18.07
19.30
Imports
€ bn
15.41
16.08
16.07
15.48
15.94
17.0
18.40
Balance
€ bn
0.18
0.42
0.68
0.84
0.88
1.07
0.9
Prices
CPI - average inflation rate
y-o-y
4.2
3.5
0.5
0.1
0.8
3.7
3.0
PPI - industry - average
y-o-y
2.3
4.1
-1.6
-2.0
-0.7
3.6
2.6
Employment
Registered unemployment
%
10.0
8.6
7.4
6.2
6.5
5.8
6.7
Average monthly gross wage
887
949
1,005
1,065
1,138
1,216
1,309
Exchange rates
EEK/USD average
-
-
-
-
-
-
EEK/EUR average
-
-
-
-
-
-

Source: Statistics Estonia, IMF, Eurostat, 2017-2018



STRUCTURE OF ECONOMY - KEY SECTORS


Agriculture accounts for only 2.5% of the GDP and employs around 3.8% of the workforce (World Bank). With rich reserves of shale oil, Estonia draws a very large part of its energy production (around 80%) from this resource, which gives it self-sufficiency in terms of electricity production. Arable land and permanent crops cover roughly 1.1 million ha, with 2 million ha under forest. The main crops include cereals, potatoes and vegetables.


The industrial sector represents around 23.5% of the GDP and accounts for 29.7% of total employment. The main industrial subsectors are the food industry (dairy products and meat processing), which accounts for over 15% of the manufacturing industry, electronics & IT (a traditional sector), the chemical industry (which accounts for 6% of the manufacturing industry) and the wood processing industry (this sector accounts for over 20% of the manufacturing industry). Altogether, the manufacturing sector alone contributes to an estimated 13.3% of the country’s GDP (World Bank).


The services sector is the most developed (in particular transport and logistics, biotechnology and financial services) and accounts for roughly 60.4% of the Estonian GDP, employing around 66.2% of the active population. The ICT sector shows the strongest performance, accounting for around 7% of total GDP and 4% of total employment (the country invested in this sector and created the TalTech’s School of Information Technologies, and the Centre of Excellence in ICT Research - EXCITE).


EXPORTS & IMPORTS


Estonia’s export/GDP ratio at 75% is the ninth highest in Europe.


2017 export and import data:




Main import partners:
Finland - 14%
Germany - 10.7%
Lithuania - 8.9%
Sweden - 8.5%
Latvia - 8.2%


Main export partners:
Finland - 16.2%
Sweden - 13.5%
Latvia - 9.2%
Russia - 7.3%
Germany - 6.9%


Estonia external trade - 2015




See references for our track record in Estonia.



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