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flag Estonia Estonia: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

Estonia became a member of the European Union on May 1st, 2004 and remains the only former Soviet country invited to join the OECD to this day (May 2010). Estonia has managed to move from a state-run and centralized economy to a dynamic market economy, liberalize by a succession of governments observing a strict budgetary orthodoxy while simultaneously modernizing the country.  The country has stands 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.

As the so-called "Baltic Tiger" Estonia experienced an average annual growth of more than 8% between 2000 and 2007. The strong demand was supported by the large amount of foreign investment, rising wages and strong growth in household debt. However, due to its dependency on foreign investment, the country was hit hard by the recession (-5.1% of GDP in 2008 and -14% in 2009) , which resulted in a lack of liquidity, damaged real estate market, rising exchange rates and a spike in unemployment (more than 15% of the workforce in June 2009).

After two years of very deep recession, Estonia has achieved amongst the highest medium‑term growth rates in the OECD with 1.5% in 2013 after 2% in 2012. The strong recovery from the crisis has benefited from structural strengths of the economy: a flexible labour force, business friendly regulation, well capitalised financial institutions, a successful transition from the currency board to euro area membership (2011) and sustained credibility of fiscal policy. Nevertheless, the Estonian economy is exposed to considerable volatility which could threaten growth, and the crisis has  left behind a high rate of unemployment (however declining regularly at 8.4% in 2013 after 11.3% in 2012). Estonia is considered one of the most liberal economies in the world by the Heritage Foundation's 2010 Economic Freedom Index.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 22.8222.6724.8926.3627.41
GDP (Constant Prices, Annual % Change) 8.34.71.6e1.2e2.5
GDP per Capita (USD) 17,16617,1091819,777e20,572
General Government Gross Debt (in % of GDP) 6.19.79.8e10.210.4
Inflation Rate (%) 5.14.23.2e0.81.5
Unemployment Rate (% of the Labor Force) 12.310.08.67.07.0
Current Account (billions USD) -0.01-0.47-0.35-0.57-0.66
Current Account (in % of GDP) -0.0-2.1-1.4e-2.2-2.4

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

Agriculture accounts for only 3.9% of the GDP and employs 4.4% of the active population.

The industrial sector, which represented 30% of the GDP in 2013, employs 29.1% of Estonian workers. The main industrial sectors of Estonia are the food industry (dairy products and meat processing), which accounts for over 15% of the manufacturing industry, electronics & IT (a traditional sector), chemical industry (which accounts for 6% of the manufacturing industry) and wood processing industry (this sector accounts for over 20% of the manufacturing industry). The Estonian industrial sector was heavily affected by the economic crisis in 2008-2009 (-26.5%) and domestic and foreign demand were considerably reduced. Since then, the country has recover and the growth of its industrial sector is largely fuelled by the exportation to Finland and Sweden, countries representing more than 33% of Estonia total export.

The services sector is the most developed, in particular transport and logistics, biotechnology and financial services. The sector accounts for 66,1% of the GDP employing 66.5% of the Estonian population. The telecommunications sector is the most performing one. Estonia has the highest connexion percentage to the Internet and has even acquired the nickname of E-stonia for its advanced progress in equipment and Internet research and development.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.7 31.1 64.1
Value Added (in % of GDP) 3.6 28.9 67.5
Value Added (Annual % Change) -3.9 1.4 2.8

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Euro (EUR) - Average Annual Exchange Rate For 1 USD 11.2611.810.720.780.76

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about Estonia on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
75.9/100
Position:
Mostly Free
World Rank:
11/178
Regional Rank:
4/43

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
7.38
World Rank:
23/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Despite the international economic crisis of 2008-2009, foreign trade's contribution to the GDP represented more than 150% in 2013. Rich in oil shale, a large part of Estonia's energy production is based on this resource (80%), which allows it to be energetically self-sufficient. Estonia is a net exporter of electricity, especially to Finland, Latvia and Lithuania. Exports increased by another 5% in 2013 in a country where 70% of the goods manufactured are exported.

The European Union countries still accounted for over 70% of Estonia's foreign trade in 2013 and the CIS countries accounted for just over 10% of the total exports. The main export trading partners of Estonia are: Sweden, Finland, Russia, other Baltic states, Germany and the United States. The main export goods are electrical and electronic equipment, wood and mineral products, metals, agricultural and food industry products, transport equipment, raw materials, textiles and electricity.

Its main import partners in 2013 were: Finland, Germany, Sweden, Lithuania, Latvia, Russia and Poland. Estonia mainly imports electric & electronic equipment, machinery, vehicles, mineral fuels (oil), iron and steel.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 10,13912,26617,63817,41118,154
Exports of Goods (million USD) 9,04011,59316,72216,12416,294
Imports of Services (million USD) 2,4832,7563,6723,8774,268
Exports of Services (million USD) 4,3434,5185,4935,4225,720
Imports of Goods and Services (Annual % Change) -30.621.026.812.23.1
Exports of Goods and Services (Annual % Change) -20.324.022.28.32.6
Imports of Goods and Services (in % of GDP) 55.968.882.588.285.2
Exports of Goods and Services (in % of GDP) 60.875.186.188.386.1
Trade Balance (million USD) -938-535-853-1,379-1,337
Trade Balance (Including Service) (million USD) 1,0061,2681,035361374
Foreign Trade (in % of GDP) 116.7143.9168.6176.4171.3

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2013
Russia 17.8%
Sweden 14.9%
Finland 14.4%
Latvia 9.2%
Lithuania 5.2%
See More Countries 38.4%
Main Suppliers
(% of Imports)
2013
Finland 9.9%
Germany 9.9%
Russia 9.3%
Sweden 7.6%
China 7.3%
See More Countries 56.0%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2013
Electrical apparatus for line telephony or line...Electrical apparatus for line telephony or line telegraphy, incl. line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones; parts thereof 9.6%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 7.3%
Insulated incl. enamelled or anodised wire, cable...Insulated incl. enamelled or anodised wire, cable incl. coaxial cable and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made-up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors 2.0%
Electrical energyElectrical energy 2.0%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 1.7%
See More Products 77.4%
- bn USD of products imported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 10.7%
Electrical apparatus for line telephony or line...Electrical apparatus for line telephony or line telegraphy, incl. line telephone sets with cordless handsets and telecommunication apparatus for carrier-current line systems or for digital line systems; videophones; parts thereof 4.5%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 3.8%
Electronic integrated circuits and microassembliesElectronic integrated circuits and microassemblies 2.2%
New pneumatic tyres, of rubberNew pneumatic tyres, of rubber 1.7%
See More Products 77.1%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

- bn USD of services exported in 2011
40.34%
23.31%
19.21%
6.18%
4.51%
4.37%
1.51%
0.42%
0.15%
- bn USD of services imported in 2011
35.93%
22.02%
21.81%
6.81%
6.19%
3.93%
2.03%
1.16%
0.12%

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of Economic Affairs and Communication
Ministry of Finance
Statistical Office
Estonian Statistics
Central Bank
Central Bank of Estonia
Stock Exchange
Tallin Stock Exchange
Search Engines
Estonia Wide Web
Google
Neti
Economic Portals
Estonian Business portal
The Baltic Times

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Political Outline

Executive Power
The President is the chief of the state and is elected by parliament for a five-year term. The President is the commander-in-chief of the armed forces. He/she nominates the Prime Minister after approval by parliament (generally leader of the majority party or coalition), for a 4 year term. Prime Minister is the head of the government and also holds the executive powers which include implementation of the law in the country and running the day-to-day affairs. The Council of Ministers is appointed by the Prime Minister, approved by parliament.
Legislative Power
The legislature in Estonia is unicameral. The parliament called State Assembly has 101 seats with its members elected by popular vote to serve four-year terms. The State Assembly is the highest organ of state authority. It initiates and approves legislation sponsored by the Prime Minister. The government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. The government cannot dissolve the parliament but can recommend the same to President who has to take parliament into confidence before taking a decision. The citizens of Estonia enjoy considerable political rights. Estonia is among the world's leaders in e-governance and features an impressively transparent system in which government decisions are almost instantly made available on the Internet.
The Judiciary is independent in Estonia, and generally free from government influence. The main source of the law is the Constitution of June 1992. The legal system is based on civil law system. No judicial review of legislative acts takes place in the country. Estonia being a member of the European Union, the national law in the country needs to comply with the conditions of the Community legislation. Estonia accepts compulsory ICJ jurisdiction, but with reservations.
Main Political Parties
Estonia has a multi-party system, with numerous parties in which no party often has a chance of gaining power alone, and thus parties must work with each other to form coalition governments. The major parties in the country are:
- Estonian Centre Party (this party has been represented in all five assemblies after Estonia regained its independence)
- Union of Pro Patria and Res Publica (it is a right-wing conservative party),
- Estonian Reform Party (it is made up of 31 members at the parliament and is the largest faction represented; it promotes liberal values)
- People's Union of Estonia (this party bases its value on patriotism, education and family).

 

For some information about political parties, the following website of the Parliament should be visited: http://www.riigikogu.ee.

Current Political Leaders
President: Toomas Hendrik ILVES (since October 2006)
Prime Minister: Taavi ROIVAS (since 26 March 2014) - ERE
Next Election Dates
Presidential: September 2016
State Assembly: March 2015
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
11/180
Evolution:
same place compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: January 2015