Estonsko
A small and heavily forested country
The most northerly of the three Baltic republics of the former Soviet Union. The Baltic Tiger.
Total area: 45,226 sq km
Population: 1.2 million
Government type: Parliamentary democracy
Administrative division: 15 counties (called “maakond”)
Capital + other major cities: Tallinn (394,000) + Tartu (101,000), Narva (66,000), Kohlta-Järve (46,000), Parnu (44,000)
Currency: Euro (since January 2011)
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: (Mr.) Alar KARIS (since 11 October 2021)
Prime Minister: (Ms.) Kaja KALLAS (since January 2021)
Date of EU accession: 1 May 2004
KEY FEATURES
- The least populous state of CEE
- Advanced, high-income economy
- One of the most wired countries in Europe
- More than 99% of financial transactions in Estonia occurr digitally
- 1st globally in the Digital Development Index (blockchain used since 2008)
- 4th freest economy in Europe
- Has the highest number of startups per capita in Europe
MACROECONOMIC OVERVIEW
Estonia, a member of the European Union and the eurozone, 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 governments have followed sound fiscal policies that have resulted in balanced budgets and one of the lowest public debts in the EU.
After an economic boom in the first decade of the 21st century (hence the term Baltic Tiger), Estonian growth in the second decade was affected by an unfavourable regional situation (European sanctions against Russia and the following counter-sanctions). GDP growth was mainly driven by domestic demand and wage rise. The Covid pandemic caused a GDP decrease of 3% in 2020 but was followed by a quick rebound. The lower economic impact of the pandemic is attributed to Estonia’s service-oriented economy, strong ICT and financial services sectors that enable teleworking, and the high digitisation of the private and public sectors. Estonia benefits from strong economic relations with the Scandinavian countries.
The country stands out mainly thanks to its IT sector (the invention of Skype, mobile payment systems, internet voting, multifunctional electronic ID cards, and cyber security initiatives), as well as its performance in the green energy sector. The country is considered a regional leader in terms of the favourable business environment, technological readiness, infrastructure, etc.
Selected economic indicators, Estonia, 2016 - 2022
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | ||
| GDP |
|
|
|
|
|
|
|
|
| Real GDP growth |
%
|
3.2 | 5.8 | 3.8 | 3.7 | -0.6 | 8.0 | -1.3 |
| GDP at current prices |
€ bn
|
21.69 | 23.78 | 26.04 | 27.73 | 27.46 | 31.44 | 36.18 |
| Foreign trade |
|
|
|
|
|
|
|
|
| Exports |
€ bn
|
15.98 | 16.80 | 18.10 | 19.33 | 19.09 | 24.68 | 30.93 |
| Imports |
€ bn
|
15.95 | 17.08 | 18.42 | 19.23 | 18.97 | 24.6 | 31.14 |
| Balance |
€ bn
|
0.848 | 1.017 | 0.915 | 1.119 | 0.12 | 0.08 | -0.2 |
| Prices |
|
|
|
|
|
|
|
|
| CPI – average inflation rate |
%
|
0.8 | 3.7 | 3.4 | 2.3 | -0.6 | 4.5 | 19.4 |
| PPI – industry – average |
%
|
-2.1 | 3.3 | 7.1 | 1.6 | -3.5 | 19.3 | 38.6 |
| Employment |
|
|
|
|
|
|
|
|
| Registered unemployment |
%
|
6.8 | 5.8 | 5.4 | 4.5 | 6.9 | 6.2 | 5.6 |
| Average monthly gross wage |
€
|
1,138 | 1,216 | 1,309 | 1,551 | 1448 | 1,548 |
Source: Statistics Estonia, IMF, Eurostat, World Bank, OECD, 2016-2022
STRUCTURE OF ECONOMY - KEY SECTORS
Agriculture accounts for only 2.2% of the GDP and employs around 3.5% of the workforce. With rich reserves of shale oil, Estonia draws a very large part of its energy production (about 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 23.6% of the GDP and accounts for 29.6% of total employment. The main industrial subsectors are the food industry (dairy products and meat processing), which accounts for over 15% of manufacturing, and electronics & IT (a traditional sector). The manufacturing of computers, electronic and optical equipment represents around 75% of the sector’s turnover. The remaining 25% is attributable to the manufacture of electrical equipment. Other traditional industries are chemicals (which accounts for 6% of manufacturing) and the wood processing industry (this sector accounts for more than 20% of manufacturing. Wooden houses have become a major export subsector). Altogether, the manufacturing sector alone contributes an estimated 12.9% to the country’s GDP.
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 80.5% is the tenth highest in Europe. Main exporting products are machinery and electrical equipment, mineral products, wood and wood products, agricultural products and chemicals.
2022 export and import data:
Main import partners:
Germany – 9.4%
Finland – 9.1%
China – 8.8%
Other Europe, nes – 8.6%
Russian Federation – 8.4%
Main export partners:
Finland – 14.1%
Latvia – 13.6%
Sweden – 8.9%
Russian Federation – 6%
Lithuania – 5.9%
Germany – 5.6%
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