PM: Estonia can still become one of 5 wealthiest European countries

Prime Minister and chairman of the Reform Party, Andrus Ansip confirmed his belief that it is still possible for Estonia to become one of the wealthiest nations in Europe.

Speaking on ERR radio, Ansip said that according to the IMF data, Estonia’s economic growth over the past decade has been an average 4.82 percent a year, which is the highest in the EU.
He said that there is no reason for anyone to fall into despair because of the global and free market cycles and that every financial boom is followed by decline.

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Tallinn-Monte Carlo Electric Race 2011 takes place in June

The Tallinn city government and Jüri Tamm, the Honorary Consul of Monaco in Estonia, have signed an agreement establishing an electric car rally between Tallinn and Monte Carlo. The route of the Tallinn – Monte Carlo Electric Race 2011, which will run from 2 -11 June, will cross Finland, Sweden, Denmark, Germany, Switzerland and Italy before reaching Monaco.

Tamm, who is himself the project’s organiser, told ERR News that the race is meant to both promote the use of environmentally-friendly vehicles and establish better links between northern and southern Europe.

He said he expects about 10 to 20 entrants to participate in the whole route, with others joining for only a portion of the stages. The number of entrants is limited by the number of electric charging points available at the end of each stage.

Racers will have to adhere to the rules of the public road, so drivers will be given points for finishing of each stage precisely at an appointed time, with points deducted for each minute they arrive early or late, Tamm explained.

The event is expected to be an opportunity for electric car producers to both test and showcase their latest models, and for private owners to simply take up the challenge of a European auto tour.

The rally harkens back to similar Tallinn – Monte Carlo races that took place in the 1930s, Tamm said.

Source: Estonian Review

Foreign ministry protects interests of entrepreneurs abroad

During his annual foreign policy address to the Riigikogu, Foreign Minister Urmas Paet noted that Estonia’s success and efforts to join the euro zone and the Organisation for Economic Co-operation and Development (OECD) have been internationally acknowledged.

“The euro adds to Estonia’s stability and dependability and is also an essential factor in ensuring the nation’s security. Membership in the OECD is a stamp of approval not only for our economy, but for our society as a whole, offering Estonia new opportunities for further development,” said Paet. Estonia was selected as nation of the year by the economics magazine The Economist.

Paet stated that the Foreign Ministry has worked consistently to more effectively supply entrepreneurs with information about how the state can assist and advise them while they make efforts to enter new markets. “An important task of Estonia’s foreign representations is aiding Estonian entrepreneurs. This purposeful co-operation is reflected in foreign trade statistics too: the export of goods from Estonia increased by 48% during October and November of last year, compared to the same period a year before. We plan to continue protecting the interests of Estonian entrepreneurs and investors abroad and co-operating with Enterprise Estonia as well as different business associations,” said Paet. “We will also continue organising, in co-operation with the Chamber of Commerce and Industry, business missions for entrepreneurs to target markets, as well as seminars concerning target markets and meetings with the relevant ambassadors,” he stated.

Paet stated that Estonia’s biggest trade partners are still its close neighbours, with whom co-operation becomes more intensive year by year. “Co-operation with the Nordic countries and more widely around the whole Baltic Sea region is valuable for Estonia, and we wish to promote it even more. But more attention should be paid to Asian markets; Estonia’s presence in Asia’s growing markets is of essential importance,” Paet emphasised.

In order to facilitate Estonian entrepreneurs entering the Central Asian market, there are plans to open an embassy in Kazakhstan and an honorary consulate in Osaka in the near future, says Paet. “We would also like to contribute to the development of bilateral relations, including economic relations, with Middle Eastern nations by appointing non-residing ambassadors to all the member countries of the Gulf Co-operation Council as well as Jordan, Lebanon, Singapore, and Syria,” he added.

Paet said that Estonia’s main objective in the course of renewing the European Union’s foreign trade strategy is to further the liberalisation of trade and to safeguard the interests of enterprises and businesses. “A number of states, using the economic crisis as an excuse, have implemented measures that hinder free trade so as to protect their own markets. We would like to focus more on removing these obstacles,” said the foreign minister. Last year the European Union concluded a free trade agreement with South Korea, and active talks are being held with Canada, India, Malaysia, Singapore, and a few other countries.

Source: Estonian Ministry of Foreign Affairs

The number of Russian tourists increased more than 50 pct

In his annual foreign policy address to the Riigikogu, Foreign Minister Urmas Paet addressed the European Union-Russia visa dialogue and stated that in the long-term perspective, concluding a visa freedom agreement with a Russia that respects the rule of law is a natural development. “But the prerequisite is fulfilling various democratic principles and the agreed technical requirements. This is the position held by both Estonia as well as the European Commission, as expressed by its president José Manuel Barroso,” Paet noted. “It is also necessary to solve the problems regarding the border crossing between the European Union and Russia,” he added.

In 2010 the three Estonian representations located in Russia issued more than 70 000 Schengen visas. “In 2010 the number of Russian tourists increased compared to the year before by more than 50%. This confirms the fact that Estonia is becoming an increasingly popular destination among Russian tourists year after year,” said Paet.

In order to facilitate visits to Estonia, 14 visa representation agreements have been concluded. “This means that a Schengen visa for travelling to Estonia can be obtained through the diplomatic representations of other Schengen zone states. Currently we have concluded representation agreements with 14 Schengen states, by means of which 85 countries in various parts of the world are now covered,” said Paet. “Estonia itself represents the Netherlands, Latvia, Poland, Slovenia, Finland, and Denmark in various cities,” he added.

Foreign Minister Paet stated that it is also important to go closer to growing Estonian communities. “Therefore we are planning to open an Estonian Consulate in Sydney this spring, which will serve Estonian citizens in both Australia as well as in New Zealand,” he emphasised.

Full text of the annual foreign policy address to the Riigikogu can be found here: http://www.vm.ee/?q=en/node/10792

Source: Estonian Ministry of Foreign Affairs

Economic growth facilitates employment

The Estonian economy is growing for the fifth quarter in a row. The recovery has also been reflected in employment, which posted a growth of 2.2%, year-on-year, in the fourth quarter of 2010.

The decline in employment, which lasted for nearly two years, ended in the second quarter of 2010, when employment increased by 0.9% on the first quarter. At the time it was not possible to say whether it was the start of a recovery in employment or merely a seasonal change. However, the labour market continued to stabilise in the next quarters as well and the recovery in employment went on.

The unemployment rate decreased gradually throughout 2010, reaching the same level (13.6%) in the fourth quarter of 2010 than a year and half earlier. A large share of the decline in unemployment was reflected in an increase in employment. The number of people looking for work did not go up, but decreased by 300 relative to the same period a year ago.

Although export and manufacturing growth rates posted unprecedented records at the end of 2010, employment did not immediately start soaring. For instance, in manufacturing, it grew by 14,600. The last time manufacturing had such employment level was three years ago. New orders are currently still met by increasing working hours and productivity, but with economic growth continuing, employment should also keep growing.

Source: Natalja Viilmann, Eesti Pank, economist

Corporate credit volume picked up in January

In January 2011, corporate credit volume recovered somewhat. The pickup in borrowing activity is best reflected in short-term financing, which has been increasing for the past few months. It was nearly 70% higher in January year-on-year, reaching close to the pre-crisis level of January 2008. In the first month of 2011, Estonia’s corporate sector was issued long-term loans and leasing worth 105 million euro. Compared to January 2010, new lending has increased in most sectors, including agriculture, manufacturing, construction, real estate and trade.

The volume of housing loans continued to grow modestly. In January as a seasonally less active month, new lending was notably smaller compared to December 2010, but was more than 6% higher compared to January 2010. Nevertheless, the 24.4 million euro volume of housing loans is only comparable to the level of the start of 2003.

The volume of car lease to both companies and households has been on a steady increase since spring 2010. In January, the real sector’s car lease volume was more than twice higher year-on-year, amounting to more than 14.9 million euro.

The financing portfolio of the real sector shrank to 15 billion euro by end-January. The stock of the loan and leasing portfolio decreased by 0.7% within a month due to amortization, reaching the level of August 2007.

Interest margins on long-term loans fell slightly in January. The average interest margin on housing loans dropped below 2% for the first time in two years, reflecting favourable credit conditions to creditworthy customers. The more volatile interest margin on long-term corporate loans fell to 2.8%. The interest rate on long-term corporate loans was 4% in January, and that on housing loans constituted 3.2%.

Loan quality improved for the fifth month in a row. The share of loans overdue by more than 60 days decreased by 21.6 million euro in a month, so the share of such loans in the loan portfolio declined to 6.4% by the end of the month.

As expected, annual deposit growth slowed in January to 5.6%. In addition to seasonal factors, deposit growth was also affected by the adoption of the euro, since the real sector’s deposits decreased in January after active depositing in the last months of 2010. The incentive of long-term depositing is subdued by low interest rates, so the share of time deposits has dropped below 42% – the lowest level in the past couple of years. At end-January, Estonia’s companies and households had a total of 7.45 billion euro in bank accounts.

Source: Viljar Vald, specialist, Financial Sector Policy Division of Eesti Pank
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Producer price indices increased in January

According to Statistics Estonia, in January 2011, the change in the producer price index of industrial output was 0.6% compared to December and 5.5% compared to January of the previous year.

In January compared to the previous month, the producer price index was more than average influenced by the increase in prices in the production of food and wood products and by the decrease in the prices of metal processing. Compared to January 2010, prices increased the most in the production of metal products.

Change in the producer price index of industrial output by economic activity, January 2011
Economic activity December 2010 –
January 2011, %
January 2010 –
January 2011, %
TOTAL 0.6 5.5
Energy supply -0.1 2.4
Mining 0.6 0.5
Manufacturing 0.6 6.0

In January 2011 the import price index increased by 1.3% compared to December 2010 and by 13.0% compared to January of the previous year.

In January compared to the previous month, the import price index was more than average influenced by the increase in the prices of agricultural products, paper, mineral fuels and chemical products.

Source: Statistics Estonia

Pensions and benefits influenced poverty rates in 2009

According to Statistics Estonia, in 2009 the average income of population decreased and the unemployment increased due to the economic crisis, but increased pensions and governmental benefits helped people to prevent the fall in poverty.

In 2009, 15.8% of the Estonian population lived in relative poverty, which is about 4 percentage points less than in 2008 when the at-risk-of-poverty rate was 19.7%. Social transfers (governmental benefits, pensions) helped to prevent the fall in poverty, if they were not included in income the at-risk-of-poverty rate was even 40.8% in 2009 (in 2008 – 37.5%).

In 2009, a person was considered to be at-risk-of-poverty if his/her monthly equalised disposable income was below 286 euros (4,480 kroons). For the first time during the last decade incomes decreased. This caused the fall of at-risk-of-poverty threshold by 24 euros (377 kroons) compared to the previous year.

Similarly to the previous year, it can be noticed that the number of younger people who are living in relative poverty is increasing, and that of persons aged 65 and older – decreasing. In 2009, every fifth 16–24-year-old person lived in poverty. An important reason for this is the high unemployment rate in the respective age group.

In 2009, the average old-age pensions increased by 8% compared to the previous year. Persons aged 65 and older were the only age group whose equalised disposable income increased in 2009 compared to the previous year. As the share of persons of pension age in population is large and their average incomes rose over the at-risk-of-poverty threshold in 2009, more than 42,000 pension aged persons got out of risk of poverty. As a result, the overall at-risk-of-poverty rate also decreased.

By type of household, the at-risk-of-poverty rate has increased the most in households of a couple aged 64 and less without children (2 percentage points) and decreased in households of a single person aged 65 and over (43 percentage points).

By regions, for the residents in Northeastern Estonia the at-risk-of-poverty rate was more than two times higher than for residents in the Northern Estonia. Similarly, the poverty risk for people living in rural settlements is significantly higher than for people living in urban settlements.

In 2009 as in previous years, the difference in income between the poorest and richest fifth of the population stayed fivefold.

More detailed data have been published in the Statistical Database (http://www.stat.ee/sdb-update?db_update_id=8542).

At-risk-of-poverty rate by age groups, 2008–2009

Diagram: At-risk-of-poverty rate by age groups, 2008–2009

The estimations are based on the social survey, which has been conducted by Statistics Estonia since 2004. In 2010, over 4,900 households participated in the survey. The survey collects data about yearly income, which is the reason why the survey of 2010 asks for data about incomes in 2009. The yearly income is necessary for calculating the indicators of poverty and inequality.

At-risk-of-poverty rate is the share of persons with an equalised yearly disposable income lower than the at-risk-of-poverty threshold. At-risk-of-poverty threshold is 60% of the median equalised yearly disposable income of household members. Equalised disposable income is the total household income, which is divided by the sum of equivalence scales of all household members.

Social surveys are conducted on the basis of harmonised methodology in all European Union countries by the name of EU-SILC.

Source: Statistics Estonia

Estonia mourns victims of a tragic fire

An orphanage for disabled children caught fire in Haapsalu, with initial reports of ten fatalities and many children hospitalized.

Viktor Saaremets, an official with the western Estonian rescue centre, told uudised.err.ee that 10 children had been killed.

President Toomas Hendrik Ilves released a statement of condolences and called for flags to be flown at half-mast on February 21.

Witnesses said the building in the coastal town of 10,000 was in flames at 2:30pm on February 20. According to the local newspaper Lääne Elu, the building caught fire quickly and the middle part of the structure has collapsed.

Postimees reported that the orphanage was home to around 40 children. All of them had disabilities ranging from severe to profound. It employs a staff of 37.

Source: ERR News

Restored St. John’s Church opened in St. Petersburg

Foreign Minister Paet stated that the renovated St. John’s Church in St. Petersburg, which was re-opened today, demonstrates Estonia’s concern for its culture and history. “St. John’s Church in St. Petersburg is tied to many important Estonian cultural figures, and the church itself played an essential role in Estonia’s national cultural history,” he noted.

Paet said that prior to renovation, St. John’s Church in St. Petersburg was on the brink of destruction and nobody was certain whether the church building would remain in the hands of Estonians and Estonian culture. “The restoration of St. John’s church started at the last moment—it was only a matter of time before Estonia and the Estonian people would have lost this church that is so important to our cultural history. We simply had to act, and take action as a people and state that value and cherish our past,” he stated. “As of today it is once again possible to hold church services and concerts in the church’s 400-seat hall. In addition to preserving a part of our culture, it is also a good opportunity for us to introduce Estonian music in St. Petersburg.”

The foreign minister said that the establishment of St. John’s Church in St. Petersburg was an Estonia-wide project that all Estonians participated in and that Russia was also interested in supporting. “It was an example of co-operation that extended across state borders,” he added. Paet stated that co-operation with the authorities in St. Petersburg also went well during the restoration of St. John’s Church.

In order to build the church, an Estonia-wide collection was organised at the end of 1850. The Russian state also made a contribution—Csar Alexander II allocated 55 000 roubles for the construction of the building.

Source: Estonian Review

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