Estonian maker of loudspeakers wins award

Estonian company Alfred & Partners has won International CES Innovations 2011 Design and Engineering Awards for outstanding design and engineering in cutting edge consumer electronics products.

Products entered in this prestigious program are judged by a preeminent panel of independent industrial designers, engineers and members of the media to honor outstanding design and engineering in cutting edge consumer electronics products across 35 product categories. Estelon XA received an award in a High Performance Audio category.

The prestigious Innovations Design and Engineering Awards have been recognizing achievements in product design and engineering since 1976. It is sponsored by the Consumer Electronics Association (CEA)®, the producer of the International CES, the world’s largest consumer technology tradeshow.

Company website

Read also 2011 Innovations Honorees

Pentagon seeks suppliers from Estonia

US troops and NATO allies who are fighting in Afghanistan could soon be drinking Värska mineral water and Kadarbiku smooties, eat Estonian-grown cabbage and carrots and use cement made in Estonia. This, of course, provided that the war in Afghanistan continues for some time and Estonian producers are selected to act as suppliers by Defence Logistics Agency (DLA), Pentagon’s main logistics organization, writes Äripäev.

DLA has already established contacts with the Estonian association of defence industries  that has 71 members and received from the association a list of possible suppliers. Among others, DLA is seeking suppliers of considerable quantiites of vegetables, drinking water and construction supplies for forces fighting in Afghanistan.

“It does not matter who is buying my products – the army or a retail chain,” says Kalle Reiter, chairman of Sagro. Reiter said that he has provided his capacity figures to the association, but there has been no feedback on the issue yet.

Source: BBN

Renewable energy subsidies inadequate

Cuts in renewable energy subsidies that the government is currently considering are unjustifid and will create problems for Estonia in the fulfilment of its green energy consumption objectives, say the organizations that represent the power and heat companies, wind power companies and hydro energy companies.

According to Estonian Power and Heat Association (EPHA), the Estonian Wind Power Association (EWPA), and Eesti Veskivaramu whose members have invested almost 8 billion kroons in renewable energy, the analysis of the Competition Board that forms the basis for the draft amendments of renewable energy subsidies act is flawed.

Tiit Rahkema, head of the Estonian Power and Heat Association, said: “In 2007, the Parliament enacted the payment system for renewable energy subsidies for 12 years and the reversal of the state’s position is unexpected and incomprehensible.  Changes in subsidies could be considered for new renewable energy projects, the initiators of which could then take these changes into account”.

Source: BBN

GDP increased by 4.7 pct in 3Q

According to Statistics Estonia, by flash estimates, the gross domestic product (GDP) of Estonia increased by 4.7% in the 3rd quarter of 2010 compared to the same quarter of the previous year.

The GDP has increased for the second quarter in succession. In the 2nd quarter this year, the growth rate was 3.1%.

The GDP of the 3rd quarter was above all influenced by the growth of value added in the manufacturing activity created due to a vigorous growth of exports. The sales of manufacturing production on the domestic market increased as well, referring to the improvement of the domestic demand. The sales of manufacturing production on the domestic market increased last in the 1st quarter of 2008. According to preliminary calculations, the gross value added produced by the industrial sector in total increased by 14%, and without taking the economic activity of construction into account – even by 23%. Besides manufacturing, the industrial sector includes also mining, electricity, gas and water supply and construction activities. In construction, the output of which is mainly targeted at the domestic market, the generated value added showed a continuous decreasing trend.

In addition to the manufacturing sector, growth of the value added created in the wholesale and retail trade and transport, storage and communications activities also had a bigger impact on the GDP growth.

Growth of the value added in financial intermediation accelerated mainly due to a strong growth in the interest net income.

According to preliminary calculations, the value added of households, non-profit institutions and the general government sector decreased.

Compared to the previous quarter, the seasonally and working-day adjusted GDP increased 0.5% in the 3rd quarter, 1.9% in the 2nd quarter and 1.1% in the 1st quarter. Thus, in the comparison of neighbouring quarters, the GDP growth rate somewhat decelerated in the 3rd quarter.

Gross domestic product by chain-linking method (seasonally and working day adjusted), 1st quarter 2005 – 3rd quarter 2010

Diagram: Gross domestic product by chain-linking method (seasonally and working day adjusted

The first estimate of the GDP for the 3rd quarter of 2010 calculated by production, expenditure and income approaches will be published by Statistics Estonia on 9 December.

Source: Statistics Estonia

Unemployment decreased in the 3rd quarter

According to Statistics Estonia, in the 3rd quarter of 2010, the estimated number of unemployed persons was 106,000 and the unemployment rate 15.5%. Unemployment decreased for the second quarter in succession.

The number of unemployed persons, which rose to record high 137,000 persons in the 1st quarter of the current year, decreased by 9,000 persons in the 2nd quarter and by 22,000 persons in the 3rd quarter. The unemployment rate fell from 18.6% in the 2nd quarter to 15.5% in the 3rd quarter. Compared to the 3rd quarter of the previous year, when the unemployed persons numbered 102,000 and the unemployment rate was 14.6%, unemployment was still bigger in the 3rd quarter of the current year.

If two years ago, unemployment started to increase especially rapidly among men, then during the last half-year, unemployment has declined also due to the decreasing unemployment among men. The unemployment among women has slightly increased at the same time. The unemployment rate of men was 16.1% and the unemployment rate of women 14.9% in the 3rd quarter.

By age groups, too, remarkable changes have taken place on the labour market during the last two quarters. The unemployment has decreased rapidly among the young and middle-aged people, but the unemployment rate of elderly people, which has been the lowest so far, grew and was even higher than that of middle-aged people in the 3rd quarter. The unemployment rate of persons aged 25–49 decreased to 12.8%, the unemployment rate of persons aged 50–74 increased to 16.4% at the same time. Even though the majority of people aged 15–24 are economically inactive (mainly due to studies), unemployment has always been a bigger problem among the youth than among older people. In the 3rd quarter of the current year, two thirds (116,000) of persons aged 15–24 were economically inactive. Economically active people (labour force) numbered 72,000 among persons aged 15–24, of them 52,000 were employed and 20,000 were unemployed. In the 3rd quarter, the situation of young people in the labour market improved. The youth unemployment rate or the share of unemployed persons aged 15–24 among the labour force of the same age, which had increased to 40.6% in the 1st quarter of the current year, decreased to 39% in the 2nd quarter and further on to 28% in the 3rd quarter. The share of the unemployed among all persons aged 15–24 was 11% in the 3rd quarter.

The problem of long-term unemployment and giving up of job seeking, which has continuously aggravated during the last year, did not ease much in the 3rd quarter. Unemployment decreased mainly due to the decreasing number of persons who had been unemployed less than a year, the number of long-term unemployed decreased only by a couple of thousands and the number of discouraged persons remained the same. In the 3rd quarter, 56,000 unemployed persons had been looking for a job for one year or more (long-term unemployed), of them 21,000 persons had been looking for a job for two years or more (very long-term unemployed). The share of the long-term unemployed among the unemployed increased to 53%, the share of very long-term unemployed persons to 20%. The number of discouraged persons or persons who had stopped seeking for a job was the same in the 3rd quarter as it was in the 2nd quarter — 9,000.

The number of unemployed persons according to the data of Labour Force Survey of Statistics Estonia and the number of registered unemployed persons according to the data of Unemployment Insurance Fund have been decreasing more or less at the same rate. The number of unemployed persons decreased by 23% (from 137,000 to 106,000 persons) in the 3rd quarter compared to the 1st quarter. The number of persons registered in the Unemployment Insurance Fund decreased by 22% (from 93,000 to 73,000 persons) during the same period.

The unemployed and registered unemployed, January 2008 – September 2010

Diagram: The unemployed and registered unemployed

In the 3rd quarter of this year, the estimated number of employed persons was 578,000, which is by 19,000 (3.5%) bigger than in the previous quarter. Compared to the same quarter of the previous year, the number of employed persons was by 20,000 (3.3%) smaller in the 3rd quarter of the current year. Compared to the previous quarter, the growth in employment was above all influenced by the increased number of persons employed in the economic activities where, during the last two years, the number of employed persons had decreased the most — in construction and manufacturing. The number of persons employed in construction increased by 14,000 and the number of persons employed in manufacturing by 12,000. Compared to the same quarter of the previous year, the number of employed persons was nevertheless slightly smaller also in these activities. But compared to the 3rd quarter of 2008, the starting period of economic crisis, this figure was remarkably smaller — by 27,000 (33%) in construction and by 20,000 (15%) in manufacturing.

The unemployment rate is the share of the unemployed in the labour force (sum of employed and unemployed persons). The estimates are based on the data of the Labour Force Survey. Statistics Estonia has been conducting the Labour Force Survey since 1995 and every quarter 5,000 persons participate in it. The Labour Force Survey is carried out by statistical organisations in all European Union Member States on the basis of harmonised methodology.

Source: Statistics Estonia

Estonian economy needs recovery of demand

According to Statistics Estonia’s flash estimate, our GDP increased by 4.7% year-on-year in the third quarter of 2010. Seasonally and working-day adjusted GDP went up by 0.5% on the second quarter, posting a somewhat slower growth than in previous quarters.

The growth of foreign trade turnover remained rapid in the third quarter as well. Both exports and imports in current prices grew by nearly a third year-on-year. Export growth indicates that the economic activity of our main export partners is expanding quickly and Estonia’s companies are making good use of it.

The export volume of industrial production reached a historical high in the third quarter. Irrespective of the continuously weak domestic demand, the sale of industrial production started to pick up in the domestic market as well, but it is still some 25% below the pre-crisis level.

Retail sale remained close to the level of the start of 2010 in the third quarter. The halt in the decline of retail sale is a sign that private consumption is stabilising. Consumers’ purchasing power will slowly start to recover along with a pickup in employment. However, since unemployment continues to be high, the level of consumers’ income and purchasing power will remain weak in the next years.

Though most of industrial enterprises still have underutilised production capacity, the existing capacity stock is running out along with rapidly expanding sales volumes. This refers to the need for additional investment. It is a favourable time for growth-oriented companies to take advantage of the opportunities arising from low-cost capital and the good availability of labour force.

Near-time economic growth in Estonia and also abroad will be affected by the withdrawal of the one-off growth-inducing measures. The impact of both fiscal policy stimuli and stocking up is fading. As a result, near-term economic developments will be shaped by the recovery of private consumption and investment.

Source: Bank of Estonia

Author: Ülo Kaasik, Head of the Economics Department of Eesti Pank

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