Ministry of Finance: soft landing has begun

According to the economic forecast for 2008-2011 produced by the Ministry of Finance in summer and published today, the growth rate of the Estonian economy is set to slow to a more sustainable level. Prices and salaries are expected to rapidly reach the European Union average.

“Based on this forecast, there’s no need for anyone to worry about the state’s finances and budget!” said Minister of Finance Ivari Padar. “The revenue we planned from this year’s budget is coming in nicely, and we’ll have more money to use in 2008 than we planned for in spring too. Before the budget strategy negotiations we forecast a budget for the coming year of around 90.6 billion kroons, but now we’re looking at 96.2 billion.” Government sector debt will also continue to decrease, falling to a record low of just 1.6 percent of GDP by 2011.

The forecast indicates that economic growth this year will be 8.1 percent, with 7.3 percent growth in 2008. “Estonia’s economy will be displaying growth figures like this for the next few years too, setting a fine example,” said Andrus Säälik, director of the Financial Analysis Department of the Ministry of Finance. “Further strong growth in exports is expected in the majority of goods groups, with domestic demand growing quite quickly from here on in – and these are the main factors influencing growth. Compared to the last few years, though, the growth rate will slow a little in both areas. Logically, this will mean a slow-down in import growth too.”

Prices are predicted to rise this year by 6.1 percent, with a further 7.4 percent rise in 2008. “The rise in prices is considerable, but the growth in people’s incomes this year and next will be even more so,” Minister Padar remarked. “It’s natural in a country like Estonia with a rapidly developing economy that prices and salaries are quickly approaching the EU average. In the last three years we’ve undergone really rapid development – our buying power is now up to 69 percent of the European Union average, whereas in 2004 it was only 53 percent. I hope that the brisk growth in salaries will see some of those people who have gone abroad to work returning to Estonia, too.” According to the forecast, realistic growth in gross salaries in 2007 (i.e. taking the effect of rising prices into account) will be 13.5 percent and 7.3 percent in 2008.

The employment rate in Estonia is also expected to remain high, and indeed continue to increase, in the coming years. The rate rose by 6.4 percent in 2006 and has risen a further 1.2 percent this year. The unemployment rate is decreasing steadily, falling to 5.3 percent by the end of 2007.

Explanations, presentations and press conference recordings about the forecast are available from the Ministry of Finance website at http://www.fin.ee/?id=263.

See also: Press briefing outlining forecast in more detail (doc)
Source: Ministry of Finance

Norwegian conference tourists value Estonia’s proximity

Enterprise Estonia’s Tourist Board commissioned a study to identify Estonia’s market position as a destination for seminar and prize trips of Norwegian companies. Similar to the study conducted last year among Swedish companies, Norwegians also appreciate Estonia’s proximity, but in their opinion Tallinn has few leisure opportunities and a lack of information on what is located elsewhere.Norway has been a stable and well developed market for Estonian tourism. Since 1995, the number of Norwegian tourists has increased each year, increasing from nearly 5000 overnight tourists in 1995, to nearly 50 000 Norwegians in 2006.”The growth has been supported by Estonia’s good reputation in Norway, favourable price levels and continuously improving flight connections between Tallinn and Oslo,” stated Piret Kallas, Tourism Research Coordinator of Enterprise Estonia. The acceleration of the growth was facilitated by the low-cost carrier Norwegian which began flying between Tallinn and Oslo in May 2006. The growth has been particularly notable during the low season, from November to April. “Another beneficial factor is that many Norwegians have not yet been to Estonia,” Kallas added.The sample of research, co-financed by the European Regional Development Fund, included Norwegian companies that have experience in organising conference trips to Estonia, which enabled them, on the basis of personal experience as well as feedback from clients, to assess the strengths and weaknesses of Estonia.One of the weaknesses of Estonia as a destination for conferences and seminars was considered to be the limited number of passenger spaces available, which does not allow for the sending of large groups to Estonia at one time. “In addition, those who have been to Tallinn might feel that they have experienced everything in one trip and are not interested in repeating the visit,” Kallas commented. “At the same time, Norwegian travel agencies have little information on sights and activities outside Tallinn,” she explained.All of the respondents believed that Latvia and Lithuania are Estonia’s direct competitors. In the opinion of many Norwegian inhabitants, the Baltic States are very similar to each other and deciding in favour of one destination among the Baltic States is quite random, depending on the best available offers.Many still consider the Old Town of Tallinn to be more beautiful and original that that of Riga and Vilnius, while at the same time the price level of Riga and Vilnius is considered to be more favourable. Many of the respondents found that Tallinn’s strength lies in the wide selection of spa services, while Riga’s advantage is an abundance of conference and leisure opportunities.Estonia was considered to be of more interest to companies with a smaller budget and those who have work relations with Estonians. The respondents believed that, in terms of its opportunities, Estonia is more suitable for organising seminars with 30-50 participants.“Our important competitors also include Prague, Budapest, Krakow and Warsaw. Their advantage is a wider selection of leisure opportunities. At the same time, it is more difficult to find flights as well as accommodations during the high season, and the prices there are also somewhat higher compared to Estonia,” Kallas commented.The respondents considered websites to be the most important means for disseminating information, DVDs were also mentioned as being important, which travel agencies could send to organisers of company events, as well as articles introducing Estonia in newspapers and magazines, TV advertisements, and newsletters with new offers intended for travel agencies.All respondents believed that in the next three years Norwegian companies will maintain their interest in organising seminars and company events in Estonia because the provision of services in Estonia seems to be continuously developing. The importance of more frequent flight connections was stressed; other important factors included better introduction of places outside Tallinn, hotels which could also accommodate larger groups, and maintenance of the current price level.Estonia’s position as a destination of prize trips was assessed to be modest. Since the budget for them is usually larger than that for seminars, these trips are to more distant places where it is possible to experience something unique or extreme. The most important criterion for the choice is the experiences offered at the destination. Popular destinations for prize trips include, for example, Istanbul, Dubai, and South Africa.

Full text of the research is available at: http://public.visitestonia.com/files/statistika/Norra%20konverentsiuuring.pdf.

Source: Enterprise Estonia