Estonia’s image on the rise

A study of country brand strength carried out by the international consultancy FutureBrand has found that Estonia still has a relatively weak image globally, but that its star is rising.

The company’s annual Country Brand Index, which combines data polled from frequent travellers and opinion leaders with the views of experts in various sectors, rated Estonia 66th out of the 113 countries covered. Estonia’s result marks a gain of 23 places compared to last year, putting its brand strength just ahead of Panama and Tanzania, and just behind Jamaica and China.

The study rated countries in five areas: value systems, quality of life, business environment, heritage and culture, and tourism. Canada came out in the top position for the second year running, followed by Switzerland and New Zealand. Iran, Zimbabwe and Pakistan ended in the rear positions.

Source: Estonian Review

OECD: Estonia’s economy grows 8 pct

The Organization for Economic Cooperation and Development has increased its forecast for Estonian economic growth this year but lowered its projection for next year. The OECD said this summer the domestic economy would grow 5.9% but yesterday it revised it to 8%.

Next year’s forecast has been cut from 4.7% to 3.2%, still slightly more than the Ministry of Finance’s 3%. The Finance Ministry said that Estonia, which is an OECD member, was one of the few countries where the OECD’s view was rosier than domestic sentiment.

“The OECD analysis supports our view that we have proceeded from a conservative line in drafting the next period’s budget,” Finance Minister Jürgen Ligi told uudised.err.ee. “[The OECD assessment] is proof that the formula for coping with the crisis is maintaining the public sector budget in proper order and adapting to a drop in spending in difficult times,” he said.

The OECD said in the 28 November Economic Outlook that the threat of a deteriorating situation in Estonia’s main trading partners and structural unemployment are risks to the Estonian economy. To hedge these risks, the OECD recommended strengthening the budgetary framework, legislating a budget position rule, and setting ceilings on spending. It also said active labour market measures had to be continued to avoid long-term unemployment and to benefit those returning from the foreign labour market.

Competition must also be ensured on the domestic market and along with close cooperation with Nordic institutions in maintaining the stability of the bank sector, the Paris-based organisation said.

Source: Estonian Review

Estonians earn 4.82 euros per hour

According to Statistics Estonia, in the 3rd quarter of 2011, the average monthly gross wages and salaries were 809 euros and the average hourly gross wages and salaries were 4.82 euros. Compared to the 3rd quarter of the previous year, the average monthly gross wages and salaries grew 6.6% and the average hourly gross wages and salaries by 4.7%.

 

The real wages which took into account the influence of the change in the consumer price index and which shows the purchasing power of wages and salaries, increased 1.2% in the 3rd quarter of 2011. Compared to the same quarter of the previous year, the real wages increased after the decrease lasting for eleven quarters.According to the Wages and Salaries Statistics Survey, the number of employees increased by 2.5% as at the end of September compared to the same period of 2010.

Compared to the 3rd quarter of 2010, the average monthly gross wages and salaries increased the most in mining and quarrying (13.4%), and decreased only in other service activities (10.2%).

Compared to the 3rd quarter of 2010, the average hourly gross wages and salaries increased the most in real estate activities (12.2%), and decreased the most in other service activities (11.4%).

The average gross wages and salaries were 785 euros in July, 817 euros in August and 826 euros in September.

In the 3rd quarter of 2011, the employer’s average monthly labour costs per employee were 1,096 euros and the average hourly labour costs were 7.64 euros. Compared to the 3rd quarter of 2010, the average monthly labour costs per employee increased by 6.7% and the average hourly labour costs by 4.1%.

Compared to the 3rd quarter of 2010, the average monthly labour costs per employee increased the most in wholesale and retail trade (12.8%) and decreased only in other service activities (10.6%).

Compared to the 3rd quarter of 2010, the average hourly labour costs increased the most in real estate activities (12.1%) and decreased the most in other service activities (9.3).

Statistics Estonia conducts the survey of wages and salaries statistics on the basis of international methodology since 1992. In 2011, the sample includes 11,277 enterprises, institutions and organisations. The average monthly gross wages and salaries have been given in full time units to enable a comparison of different wages and salaries, irrespective of the length of working time. Calculations of the monthly gross wages and salaries are based on payments for actually worked time and remuneration for time not worked. The hourly gross wages and salaries do not include remuneration for time not worked (holiday leave pay, benefits, etc.). In short term statistics, the average gross wages and salaries are measured as a component of labour costs. Labour costs include gross wages and salaries, employer’s contributions and employer’s imputed social contributions to employees.

The low wages (salaries) of employees of education in the 3rd quarter was related to reflecting the holiday leave pay of most employees in the 2nd quarter.

Average monthly gross wages and salaries, 1st quarter 2007 – 3rd quarter 2011 (euros)
  Year 1st quarter 2nd quarter 3rd quarter 4th quarter
2007 724 660 738 697 784
2008 825 788 850 800 838
2009 784 776 813 752 783
2010 792 758 822 759 814
2011   792 857 809  

Average monthly gross wages and salaries and monthly labour costs per employee, 3rd quarter 2011

Diagram: Average monthly gross wages and salaries and monthly labour costs per employee1

Average hourly gross wages and salaries and hourly labour costs, 3rd quarter 2011

Diagram: Average hourly gross wages and salaries and hourly labour costs

Source: Statistics Estonia

96 pct households prefer Internet payments

According to TNS Emor, which has been mapping the financial behaviour of Estonia’s households, the role of cash in payment habits and income receipts has remarkably declined.

According to the survey conducted in September, 59% of the respondents prefer to pay by card for their daily purchases (in 2009, the share was just 44%). About a tenth of households uses either only cash or only a bank card to pay for their daily purchases.

“The share of residents using secure and convenient payment means is on the rise. It is likely that the adoption of the euro has also affected payment habits,” said Mihkel Nõmmela, Head of the Payment and Settlement Systems Department of Eesti Pank.

The survey also revealed that the use of Internet payments has soared across all household groups over the past year. The share of households making regular Internet payments has risen from 91% in 2009 to 96% this year. Non-bank channels are still used by every fourth household and their share is declining.

According to Nõmmela, the next big step in the field of payments is full implementation of the Single Euro Payments Area (SEPA). “The Estonian people often feel the different level of banking services in Europe, when it is impossible to pay by card, a bank transfer takes a lot of time, or when they are unable to purchase something from a European e-store. SEPA improves communication between payment systems and makes payments faster and more efficient,” he said.

According to the survey, six out of a hundred employees receive their income in cash, whereas lower-paid people are more often paid in cash than others. When making purchases, pensioners and lower-paid people tend to use cash instead of bank cards, but the share of pensioners paying by card is increasing.

13% of the respondents have bought goods or services from foreign e-stores over the past year. TNS Emor is of the opinion that this number will go up, since 21% of the respondents said they were going to purchase from foreign traders the following year. The TNS Emor survey included 981 households, with people aged 18-74 questioned. The survey was commissioned by Eesti Pank.

TNS Emor has been conducting the F-monitoring survey since 1998. The aim of the survey is to map changes in the Estonian residents’ use of money and financial-behaviour possibilities and desires.

Source: Bank of Estonia

The Estonian credit market

The deteriorating external environment has not yet significantly affected the Estonian credit market. The volume of long-term loans and leases issued to companies in October was only a few per cent smaller than in September, totalling 145 million euros. Year-on-year, new lending has increased 36 per cent. However, the slowdown in growth in Europe may soon start reflecting in the revenue and investment of Estonian companies, and thus also lending growth may moderate in the future.

The volume of new housing loans grew by a third in October from a year ago. The number of loan contracts, on the other hand, increased only 6 per cent, which means that the average loan amount has risen. This is in line with this year’s developments in the real estate market, where the transaction activity is low with focus being on relatively more expensive residential premises.

The sale of car leasing, which almost doubled in the spring of 2011, has remained stable in autumn. Even though annual growth in car leasing has slowed considerably in the past few months, it was still strong at 52 per cent in October due to last year’s low comparison base.

The loan portfolio of banks has been contracting at a slower rate. The volume of new lending was smaller than the repayments of loans issued earlier, and so the loan portfolio kept shrinking in October. At the end of the month, the stock of loans and leases granted to Estonian companies and households was 14.5 billion euros; that is 4.9 per cent lower than it was a year ago.

The average interest rate on housing loans issued in October did not change from 3.4 per cent. The average interest rate on long-term corporate loans, which tends to fluctuate from month to month, dropped to this year’s average level of 4.3 per cent.

The share of overdue loans in the loan portfolio shrank to 5.7 per cent. The level of loans overdue for more than 60 days decreased by 31 million euros in October. Two thirds of that decrease arose from the improving loan portfolio of companies.

Annual growth in household deposits picked up to 14 per cent. The total deposits of Estonian companies and households totalled 7.8 billion euros at the end of October, up 7.1 per cent from a year ago. Month-on-month, the total of deposits grew by 74 million euros, with both companies and households relatively equally contributing to growth.

Author: Jana Kask, Head of the Financial Sector Policy Division of Eesti Pank

Read more from Bank of Estonia

Taxpayers owe state 38 MEUR

Taxpayers still owe the state 38 million euros as of the first nine months of the year, according to the Tax and Customs Board.

Of the total debt, 19.4 million euros is related to value-added tax and 4.4 million euros to the construction sector, the agency said.

“The efficiency of our risk analysis shows that 88 percent of the audits result in changes to tax payments,” said audits director Kaido Lemendik.

Read more from BBN

State pays construction companies in 80 days

Construction companies that win public contracts are getting used to the fact that they are paid in 70 or 80 days after invoicing.

Since in many such cases, the projects are being co-financed by the European Union, the state simply tells the builder that it cannot pay faster because of EU regulations.

Janno Vink, CEO of Nordecon, says that since state and local governments account for about 70% of all construction, the problem is very acute.

Read more from BBN

Estonia has potential as exporter of processed agricultural produce

According to a study of the Organization for Economic Cooperation and Development the agricultural products made in Estonia are among the best traded and rapidly growing export products on the world markets.

It appeared from the OSCE study that 14 of the 20 most traded agricultural products in the world were made in Estonia, the Agriculture Ministry said. It also appears that in 2007 Estonia had a relative competition advantage both concerning the whole agricultural sector and the products made.

The relative competition advantage of the goods processed in the Estonian agricultural sector were mainly remarkable because generally rich countries with a high income are dominating there, the ministry said.

The list of products with an export potential includes several dairy products, including cheese, as well as various meat products, sweets, alcoholic beverages and beer. Sauerkraut and gingerbreads were mentioned among products of the highest export potential. “The study confirms that our agricultural sector, even despite low direct subsidies, has a great export capacity and it must be supported by means of enterprise and various policies. To carry out the opportunity it is necessary to achieve more equal direct subsidies in the European Unions’ Common Agricultural Policy,” Agriculture Minister Helir-Valdur Seeder said.

The OECD study covers the period 1995–2008. It appears from the study that the trade in agricultural products has grown, but not as fast as trade in manufactured products. Only a small number of countries dominate in the world trade of processed agricultural products, whereas export of the 20 leading countries accounts for three fourths of the processed products traded. Trade of countries with the biggest incomes is bigger and their choice of products is bigger.

Source: Estonian Review

 

61 pct of exports come from 500 companies

Tanel Rebane, analyst of Enterprise Estonia, writes that a survey of more than 10,000 exporters shows that behind Estonia’s recent economic and export growth is a relatively small number of enterprises.

The top 500 companies exported a total of 5.4 billion euro worth of goods in 2010 which is equal to Estonia’s national budget volume.

A little half of these 500 companies are owned by Estonian capital, while 25% of companies belong to Scandinavians.

The largest single exporter in 2010 was Ericsson Eesti.

Read more from BBN

Estonia’s current-account surplus at record high

Estonian central bank Eesti Pank said yesterday that the September current-account surplus was 150 million euros in September which is the highest figure for two decades, writes Äripäev.

Most analysts interviewed by Äripäev agreed that it is a positive macroeconomic news which shows that Estonian economy earns income from exports and is well prepared if the eurozone economy slows down.

Economist Andres Arrak says that the last time that the current account was in surplus was in 1992.

Read more from BBN

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