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flag Estonia Estonia: Economic and Political Outline

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 it is an attractive investment destination on the Baltic Sea (one of the fastest growing European markets in recent years), with a sound economy. A balanced budget (guaranteed by the Constitution), a free-trade regime, a fully exchangeable currency, a competitive commercial banking sector, and a foreign investment-friendly environment are some of the assets that have contributed to the country's success.

However, the country's economic situation, which was amongst the Baltic "tigers", has recently deteriorated. The 2008-2009 economic and financial crisis has deeply affected the country, its GDP had a drop of 14% (one of the highest in the world), resulting mainly in a lack of liquidity, a damaged real estate market, high exchange rates and a very high unemployment rate (more than 15% of the active population in June 2009). Estonia's economic activity diminished almost by 10% in the last quarter of 2008 and the country went into recession in 2009. The growth has slightly become positive in 2010, at about only 1%, and the forecast counts with an increase of more than 4% annually starting in 2011, thanks to the effects of the country's entry into the Eurozone on 1 January 2011. Estonia is considered by the Heritage Foundation's 2010 Economic Freedom Index as one of the most liberal economies of the world.

 
Main Indicators 2009201020112012 (e)2013 (e)
GDP (billions USD) 19.32e19.25e22.5423.9025.01
GDP (Constant Prices, Annual % Change) -13.9e3.1e6.54.04.2
GDP per Capita (USD) 14,410e14,40516,88017,90818,753
General Government Gross Debt (in % of GDP) 7.2e6.66.0e5.65.3
Inflation Rate (%) -0.12.95.1e3.52.5
Unemployment Rate (% of the Labor Force) 13.816.913.511.59.5
Current Account (billions USD) 0.880.690.550.550.18
Current Account (in % of GDP) 4.53.6e2.40.7-

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

Note: (e) Estimated Data

Main Sectors of Industry

Agriculture accounts for only 3% of the GDP and employs 3.7% of the active population.

The industrial sector, which represents 24.4% of the GDP, employs 35.5% of Estonian workers. The main industrial sectors of Estonia are the food industry (dairy products and meat processing), which accounts for 16% of the manufacturing industry, electronics (a traditional sector), chemical industry (which accounts for 6% of the manufacturing industry) and wood processing industry (this sector accounts for 24% 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.

The services sector is the most developed, in particular Transport and logistics, biotechnology and financial services. The sector accounts for 72.6% of the GDP employing 60.3% of the Estonian population. The telecommunications sector is the most performing one, Estonia 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) 4.0 31.3 64.1
Value Added (in % of GDP) 2.9 29.1 68.0
Value Added (Annual % Change) 5.7 -4.8 -0.4

Source: World Bank - Last Available Data.

 
 
Monetary Indicators 20062007200820092010
Euro (EUR) - Average Annual Exchange Rate For 1 USD 12.4711.4310.6911.2611.81

Source: World Bank - Last Available Data.

 
 
Learn more about Market Analysis about Estonia on Globaltrade.net, the Directory for International Trade Services.
 

Indicator of Economic Freedom

Score:
75.2/100
Position:
Mostly free
World Rank:
14/179
Regional Rank:
5/42

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

 

Country Risk

See the Country Risk Analysis Provided By Ducroire.

 

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Foreign Trade in Figures

Despite the international economic crisis, foreign trade's contribution to the GDP was positive in 2008-2009, at around 7%.  In 2009, exports had a drop of 25%. 

The European Union countries account for 70% of Estonia's foreign trade and the CIS countries account for 11% of the total exports. The main export trading partners of Estonia are: Finland, Sweden, Russia, other Baltic states, Germany and the United States.  Its main import partners are: Finland, Germany, Sweden, other Baltic states, Russia and Poland. 

The main export goods are electrical and electronic equipment, wood and mineral products, metals, agricultural and food industry products, transport equipment, raw materials and textiles. Estonia mainly imports electric & electronic equipment, machinery, vehicles, mineral fuels (oil), iron and steel.

 
Foreign Trade Indicators 20062007200820092010
Imports of Goods (million USD) 13,44915,67716,02710,13912,284
Exports of Goods (million USD) 9,69211,01012,4539,04011,596
Imports of Services (million USD) 2,4513,0223,3032,4832,655
Exports of Services (million USD) 3,5564,3225,0944,3434,399
Imports of Goods and Services (Annual % Change) 13.37.8-7.0-32.68.8
Exports of Goods and Services (Annual % Change) 6.71.50.4-18.710.7
Imports of Goods and Services (in % of GDP) 84.079.175.859.172.2
Exports of Goods and Services (in % of GDP) 73.668.471.665.378.3
Trade Balance (million USD) -2,906-3,619-3,124-775-331
Trade Balance (Including Service) (million USD) -1,783-2,189-1,2951,1241,399
Foreign Trade (in % of GDP) 157.5147.6147.4124.4150.6

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

 

Main Partner Countries

Main Customers
(% of Exports)
2010
Finland 15.3%
Russia 14.8%
Sweden 14.1%
Latvia 8.1%
Germany 4.7%
See More Countries 43.0%
Main Suppliers
(% of Imports)
2010
Finland 11.6%
Germany 10.6%
Russia 10.5%
Sweden 8.5%
China 6.9%
See More Countries 51.9%

Source: Comtrade, Last Available Data

 

Main Products

Main Exports
(% of Exports)
2010
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 12.6%
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 6.1%
Insulated "incl. enamelled or anodised" wire,...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 2.3%
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) 2.3%
Electrical energyElectrical energy 2.2%
See More Products 74.5%
Main Imports
(% of Imports)
2010
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 13.6%
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 3.9%
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) 2.6%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 1.9%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 1.7%
See More Products 76.3%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen 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 statal 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: Andrus ANSIP (since April 2007)
Next Election Dates
Presidential: September 2016
State Assembly: Year 2011
 

Indicator of Freedom of the Press

World Rank:
9/178
Evolution:
3 places down compared to 2009

Source: Worldwide Press Freedom Index 2010, Reporters Without Borders

 

Indicator of Political Freedom

Ranking:
Free
Political Freedom:
1/7
Civil Liberties:
1/7

Map of freedom 2010
Source: Freedom House

 

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Last Updates: January 2012