City of Tallinn to build 1000 apartments in 6 years

The Tallinn City Council is reading the draft housing construction programme that is targeted at young families and aims to provide housing for employees required by the city.

This is the second such programme as the first was approved in October 2005 under the slogan “A home for every young family.”

Deputy Mayor Eha Võrk said that under the programme the City plans to build about one thousand apartments in six years. “This is very little since Helsinki, for instance, builds a thousand apartments a year,” said Võrk.

Read more: BBN

Latvian wages up 28.1 pct in Q1

Latvia’s average wage rose an annual 28.1 pct in the first quarter, the slowest pace in a year, as public-sector wage growth waned, Bloomberg reports.

Wage growth in the previous quarter was 29.8 pct on the year, the statistics department said today. Private sector wages grew faster than public sector pay for the first time since the third quarter of 2006, according to the statement.

Quick wage growth has added to inflation, which surged to 17.5 pct in April, and helped widen the country’s current- account deficit. Real wages grew 11.4 pct even as retail sales fell 1.1 pct in the first quarter as Latvians curtailed spending.

Read more: BBN

Innovation is the main growth source of a developed economy

Today, May 29, Deputy Governor of Eesti Pank Andres Sutt participated in the Äripäev conference dedicated to county entrepreneurs, giving a presentation “A version update in the Estonian economy”, where he spoke about the changes taking place in our economy and the next years’ possibilities.

Andres Sutt discussed the Estonian economic development of the past 15 years by dividing it into three stages. “To start with, during the period 1992-1999 the Estonian economy underwent the necessary changes to transfer from early capitalism to capitalism and the period ended with the per capita GDP level constituting 42% of the average of the current 27 EU Member States,” Sutt said. He added that the following seven years, 2000-2007, formed the second stage of Estonia’s economic development and can be referred to as our arrival in Europe. “This period is characterised by integration with the Nordic Countries, joining the EU, and a very high level of investment. Our development was also supported by a favourable global economic situation. As a result, our GDP per capita level increased to nearly 72% vis-à-vis the 27 EU Member States,” Sutt described Estonia’s economic development.

“But just like software, economy, too, needs a version update once in a while. This does not mean the current economic model should be discarded. Instead, it needs to be updated. The forthcoming 12-18 months are the right time to make changes and to lay foundations for a new upturn based on innovation at the level of both enterprises and the state. This is the only way to ensure the global competitiveness of our goods and services. Readiness for change and right decisions are especially important at this very juncture, since the external environment is currently less favourable than in the turning points of earlier economic cycles. Estonia’s balanced budget and fixed exchange rate help ensure a stable economic environment and thus also our reliability and attractiveness for investors,” said Andres Sutt. He added that the high level of investment and integration with the Nordic Countries, which belong to the top of the world as regards competitiveness, give Estonia a good starting position. If we use our possibilities wisely, our economy may catch up with the European level by the end of the next decade.

Source: Bank of Estonia

Modest beginning on the construction market

According to Statistics Estonia, in the 1st quarter of 2008 compared to the same period of the previous year, the total production of Estonian construction enterprises in Estonia and in foreign countries decreased 4%.

The construction market which had shown a rapid growth in recent years slowed down during 2007 and turned to the decline at the beginning of 2008. It was mainly caused by the decreased volumes in dwelling construction on domestic construction market. The construction market was influenced by recession, continuous increase in interest rates of settlement loans and a rise in construction prices.

In the 1st quarter of 2008 the production value of construction enterprises amounted to 7.3 billion croons, of which the production value of building construction was 5.4 billion kroons and the production of civil engineering totalled 1.9 billion kroons. Compared to the same period of 2007 the volume of building construction decreased 9%. At the same time the volume of civil engineering increased 17%. Although the volume of civil engineering grew, its influence on the construction activity was small, accounting for only a fourth of the total volume of construction. The beginning of the year was successful for construction enterprises operating in foreign countries. The construction volume in foreign countries increased more than a third compared to the same period a year ago.

According to the data of the Register of Construction Works, in the 1st quarter of 2008 the number of dwelling completions was 1,846, i.e. 461 dwellings more than in the same period of 2007. Similarly to the previous years, three quarters of completed dwellings were situated in blocks of flats. Since the second half of 2007 the demand for new dwellings has been continuously decreasing. In the 1st quarter of 2008 building permits were granted for the construction of 1,128 dwellings, which is about 2.5 times less compared to the same period of 2007. The most popular type of building was one-family dwelling.

In the 1st quarter of 2008, the number of completed non-residential buildings was 222 with the useful floor area of 227,000 square metres. The useful floor area of commercial and office buildings increased the most. Compared to the same period of 2007, the useful floor area and the cubic capacity of completed non-residential buildings decreased.

Trend of construction volume index, 1st quarter 2000 – 1st quarter 2008 (average of quarters of 2000 = 100)

Source: Statistics Estonia

In April the retail sales remained on the same level

According to Statistics Estonia, in April 2008 compared to April of the previous year the retail sales of goods of retail trade enterprises stayed at the same level in constant prices.

In April, the retail sales of goods of retail trade enterprises were 4.6 billion kroons. In grocery stores the retail sales of goods decreased one percent compared with the April of the previous year. The retail sales in stores selling manufactured goods increased by 2% compared with the same period of the previous year. Compared to April of the previous year, the retail sales of pharmaceutical goods and cosmetics increased 10%, the retail sales of stores selling textiles, clothing and footwear and also of stores selling household goods and appliances, hardware and building materials increased 1%. Retail sales of non-specialized stores selling industrial goods and retail sales of other specialized stores stayed at the same level compared to April of the previous year.

Compared with March, the retail sales in retail trade enterprises increased 1%.

In April the revenues from sales of retail trade enterprises were 5.5 billion kroons, of which retail sales of goods accounted for about 85%. Compared to April 2007, the revenues from sales increased 9% in current prices. Compared to the previous month, this indicator increased 2%.

Retail sales volume index of retail trade enterprises and its trend, January 2000 – April 2008 (corresponding month of the previous year = 100)

Source: Statistics Estonia

Decrease in electricity production suppressed the growth in industry

According to Statistics Estonia, in April 2008 compared to April of the previous year the industrial production decreased 0.2%, but compared to March the production increased.

In April 2008, the seasonally adjusted industrial production of Estonia rose 5% compared to March.

In comparison with April of the previous year, the industrial production decreased 0.2% due to the decrease in energy production. In April 2008 compared to April of the previous year, the production of electricity decreased 16%, the production of heat 11%. The decrease in electricity production was caused by partly replacement of own production with imports. In April about 25% of consumed electricity was imported.

Compared to April of the previous year, the production in manufacturing rose 3%. The growth was mainly influenced by export oriented branches: production of metal products, chemicals and electrical machinery. The share of exports in the manufacturing of chemicals and electrical machinery was over 80%. The value index of industrial export sales in total manufacturing increased 22%, the value index of industrial domestic sales only 2%. The share of exports in the total manufacturing has been growing continuously and exceeds 60%.

The production for domestic market suppressed the increase mainly in the production of food and building materials. The decline in the manufacturing of food is continually affected by a fast price increase and by the decrease in consumption resulting from it. In April the prices rose about 19% compared to April of the previous year, in the manufacturing of milk products the increase was 33%. Nevertheless the producer price of manufacturing of milk products showed a declining trend compared to March. Compared to April of the previous year, the production of building materials fell 15% due to a slowdown in construction activities. The downward trend continued in the manufacturing of wood, the production of furniture also decreased.

The volume index and trend of production in manufacturing, January 1998 – April 2008 (2000 = 100)

Change in volume index of industrial production, April 2008 (percentage)

Economic activity Change compared to
previous month
according to
seasonally adjusted
Change compared to corresponding
month of previous year
according to
unadjusted data
according to
working-day adjusted
TOTAL 4.5 5.0 -0.2
Energy production 11.8 -14.5 -14.5
Mining 0.7 -5.9 -11.1
Manufacturing 4.4 8.5 2.8
manufacture of food products and beverages -0.7 -2.1 -5.6
manufacture of wood and wood products 4.0 -8.1 -13.1
manufacture of fabricated metal products 15.1 54.8 44.1
manufacture of electrical machinery 1.7 25.1 16.8
manufacture of building materials 3.9 -11.8 -15.3
manufacture of chemicals and chemical products 1.3 13.6 8.7
manufacture of furniture; manufacturing not elsewhere
3.0 -5.4 -11.9
manufacture of radio, television and communication
equipment and apparatus
34.2 12.6 7.7
manufacture of textiles 0.9 2.5 -3.2

a In case of the seasonally adjusted volume index, the impact of the differing numbers of working days in a month and seasonally recurring factors has been eliminated. It is calculated only in comparison with the previous period.

b In case of the working-day adjusted volume index, the impact of the differing number of working days in a month has been eliminated. It is calculated only in comparison with the corresponding period of the previous year.

Source: Statistics Estonia

Government approves waste action plan for next five years

Today, 29 May 2008, the Estonian government approved the national waste action plan for 2008-2013, which is designed to drastically reduce the amount of waste being used for landfill and the danger associated with waste produced as well as to increase recycling.

The key aspects of the waste action plan for the next five years are the sorting of waste where it occurs and collection of different types; the development of waste collection points and stations; and the reduction of the amount of waste produced and the danger it presents, including the recycling of waste for energy production, i.e. the incineration of waste according to requirements. One significant difference between this action plan and the last is that it now features waste action plans on a county by county basis.

“Specific targets have been set in the Packaging Act for the recycling of packaging in order to reduce waste, and specific restrictions have been put in place in the Waste Act with regarding to landfill from household waste,” explained Peeter Eek, Director of the Waste Department of the Ministry of the Environment. “A range of activities have been included in the waste action plan in order to achieve these goals, and implementing them will depend largely on local governments.” Eek added by way of example that it is the role of local governments to develop waste collection points and stations.

In order to have achieved a comprehensive, national waste management system by 2013, local governments will have to work together more closely in the production of documents related to the organisation of waste treatment and in the development of the collection of different types of waste.

One of the major problems highlighted in the waste action plan is that up to 20% of Estonian residents remain outside of the waste collection system, which in turn promotes dumping. The acuteness of the problem was underscored this spring by the results of the “Let’s Do It 2008” campaign to clean up the country. “People’s environmental awareness will need to have increased to such an extent over the next five years that less household waste is being produced and recycling is more common,” said Eek. “At the same time, illegal waste treatment must be reduced, and that is something we can only gain control over by implementing organised waste transport, by improving the efficiency of the collection of different sorts of waste and with effective surveillance.”

The options for the treatment of different kinds of household waste were analysed as part of the waste action plan, and it was revealed that the most effective measures in achieving the aims of the action plan are the sorting of recyclable waste and the incineration of remaining mixed waste. A start has been made on a household waste incineration plant project, but launching such plants will take time. In Tallinn (i.e. the area covered by the Tallinn waste incineration plant) it is realistic that this will be achieved by 2011. Consequently, the separate collection of biodegradable waste must be made more effective if the requirements established in the Waste Act are to be met.

The waste action plan foresees that by 2010 there will be 6 or 7 waste treatment centres operating in Estonia (one part of which could still be landfill of ordinary waste) and between 3 and 5 waste disposal sites for industrial and dangerous waste. 10 ordinary waste disposal sites remain to be closed by 2009. Regeneration (covering et al) of the disposal sites which have already been closed down will continue until 2013.

Production of the national waste action plan was led by the Ministry of the Environment. Representatives from the Ministry of Economic Affairs and Communication and the Ministry of the Interior, the Estonian Waste Management Association, local government associations and the Estonian Council of Environmental NGOs were also involved in the process.


Source: Estonian Ministry of the Environment

What happened to the Estonian economy?

Aare Kilp writes in Äripäev that the economic recession in Estonia was not caused by the cooling of the world economy. Kilp who is former CEO of Go Group writes in Äripäev that the main driver behind the Estonian growth in recent years was not the world economy, but the inflow of cheap loans from Scandinavian parent banks.

“Encouraged by Estonia’s progress towards the eurozone, Scandinavian banks were supplying between EEK 30 and 40 billion a year to Estonia. Most of this money was borrowed at low interest rates by private persons to buy housing. This caused a boom in the real estate sector and in other sectors that feed on it.

… he ends with

I think that the future is in the IT business. Estonia is known worldwide as a tech-savvy country, mostly thanks to the success of Skype. Estonian state and companies should focus on how to export their IT products and services worldwide since without exports the future will be very dark.

Read more: BBN

EU may not finance Estonia in the future

Estonia is unlikely to receive aid from European Union Cohesion Fund starting from 2014.

EU will not support Estonia because compared to European average, Estonia is statistically too wealthy, Eesti Ekspress writes. The Cohesion Fund aid is for countries that gross national product (GNP) per capita is less than 75 pct of the EU average.

According to Kalle Killar of Ministry of Finance, Estonian GNP is on the 73-74 pct level. The GNP is likely to raise over 75 pct in the near future.

In 2004-2006, EU Cohesion Fund supported Estonia with EEK 6.7 bln.

Source: BBN

Minister Wishing To Warm Up Plan of Listing State-Owned Companies

Estonian Economic Affairs Minister Juhan Parts said it would be positive if the government would again table the plan of listing state-owned companies and would look for new opportunities of growth for them.
He said there was currently no common view in the government, but due to significant fall in economic growth it was necessary to discuss what should be changed and what the companies’ growth strategy would be in the next few years.
Listing of Eesti Energia (Estonian Energy), Eesti Raudtee (Estonian Railway), Eesti Post (Estonian Post), Tallinn Sadam (Port of Tallinn), Tallinna Lennujaam (Tallinn Airport) and Eesti Loto (Estonian Lottery) has been discussed. Parts added that an analysis would have to be drawn up separately for each company.
Andurs Alber, board chairman of OMX Tallinn Stock Exchange, said Eesti Energia could be the first to be listed. “It is a major company with a market value of 25 billion kroons (EUR 1.6 b) and if 10 or 20 percent is listed, it would be one of the biggest companies not just on our market but on all Baltic stock exchanges,” Alber said.
Alber said now was the right time to analyze when and what state-owned companies could be listed and a decision in principle could be made by this fall.
The opposition parties are against the listing of state-owned companies.

Source: Estonian Review