The 2011 population and housing census has begun

Today, in the first minutes of 31 December, the eleventh Population and Housing Census began in Estonia. Until the end of January, residents can participate in the Census online, since mid-February enumerators will be visiting homes.

Today, in the first minutes of 31 December, the eleventh Population and Housing Census began in Estonia. Until the end of January, residents can participate in the Census online, since mid-February enumerators will be visiting homes.

“This Census is a historic occasion as for the first time people of Estonia can choose how they wish to participate in the Census – to complete the questionnaire online during January or wait for the visit of the enumerator starting from 16 February,” said Mr Priit Potisepp, Director General of Statistics Estonia.

“It is easy to complete the questionnaire online. Anyone who is able to use the computer can do it. Besides the possibility of using the Internet, all you need is an ID card, Mobile ID or Internet bank codes,” added Mr Potisepp. One can complete the census questionnaire online on the website of the Population Census All permanent residents of Estonia aged over 15 can complete questionnaires for themselves, parents or guardians complete the questionnaires for their children. The households who did not participate in the Population Census online, will be visited by enumerators starting from 16 February.

The 2011 Population and Housing Census consists of three parts – questions about the household, dwelling and persons. The questions concern the composition of the household, the size and condition of the dwelling, the origin of the respondent, language skills, education and employment. In case of a household with two members, it will take about 45 minutes to answer the questions, with a further 15 minutes required for each additional person.

In Estonia, the Census will be carried out from 31 December this year until 31 March next year. The electronic Population and Housing Census or e-census, where the permanent residents of Estonia can fill in questionnaires on the Internet, will take place during the first month (31 Dec 2011 to 31 Jan 2012). Those who do not participate in the e-census will be visited by an enumerator in the period of 16 February to 31 March 2012.

In 2011, the Population Census will be conducted for the eleventh time in the territory of Estonia. Previous censuses were carried out in 1881, 1897, 1922, 1934, 1941, 1959, 1970, 1979, 1989 and 2000.

Read more from Statistics Estonia website

The impact of private debt on economic growth

Both theoretical and empirical evidence show that recessions are steeper in countries with high levels of private debt and/or credit booms.  

But do these negative effects carry over to the period where the recession is over and the economy recovers from the crisis? In this paper published on the Bank of Estonia website the authors look at economic recovery episodes and relate the growth performance of countries with their debt levels and debt growth before the beginning of the recession. 

They find that a higher level of debt before a recession is correlated with smaller economic growth after the economic slowdown has finished. In contrast, higher credit growth before a recession is associated with higher GDP growth after the crisis. 

The effects of debt on consumption are more negative, implying that after recessions people

consume less and save more than they did in the period before the recession. However, the overall economic effects of the debt measures on GDP and consumption growth are limited. 

Read more from

Working Paper by Martti Randveer, Lenno Uusküla, Liina Kulu

„The Impact of Private Debt on Economic Growth“

Eesti Pank’s 2012 budget size is 19.8 MEUR

Eesti Pank’s 2012 budget size is 19.8 million euro. The 13.8 per cent increase compared to 2011 was mostly due to the exponential increase in cash related costs.

Eesti Pank will participate in the production of euro banknotes for the first time in 2012. Next year, the central bank will have to return the 44 million banknotes borrowed from the Eurosystem in autumn 2010 in order to change over to the euro. In addition, it is necessary to produce the annual cash share allocated by the European Central bank. Eesti Pank and eight other euro area central banks acquire their shares of banknotes via a joint procurement. Eesti Pank’s responsibility is to produce 20-euro notes, which will be added to the Eurosystem’s common cash stock.

In 2010-2011, Eesti Pank spent 12.7 million euro on the changeover to the single currency. This was covered from a separate euro-adoption budget. About 95% of the costs were cash related. Other larger expenditures were made on information campaigns and information technology.

Cash related costs excluded, the central bank’s next year’s budget is 3.1% larger compared to 2011.

Eesti Pank’s larger investments will be in the IP-based telephone system and in repairing the ventilation system and the roof. Personnel costs will grow by 2%, to 8 million euro.

According to Eesti Pank’s forecast, next year’s revenues will be 22.8 million euro. As a euro area central bank, Eesti Pank’s main sources of revenue are reserve placement, monetary income and income from reserves managed by the ECB.

Eesti Pank’s long-term objective is to keep the level of expenditure relative to GDP at a level comparable to previous years. Since costs related to cash vary across years, these have not been included in the comparison. The central bank’s budget size was 0.101% of GDP in 2011. Based on the economic forecast, the indicator for the 2012 budget is 0.098%.

Eesti Pank’s task is to ensure price stability in the euro area along with other euro area central banks. To this end, Eesti Pank must be independent, so the central bank is not related to the state budget.

The 2011 net operating surplus of Eesti Pank will be published in the central bank’s annual report in the first half of 2012. Previous annual reports are available at:

 Source: Bank of Estonia

November saw a notable shrinkage in overdue loans


The turnover of long-term corporate loans remained at the previous month’s level of 145 million euro. No remarkable changes took place in the volume of short-term loans and leasing, either. Lending activity was the most active in the trading sector, which took more short-term loans to finance their stocks in anticipation of soaring sales volumes at the end of the year. Over the past 11 months of this year, traders have received 28% more credit and leasing than a year ago.

The housing loan market showed no relevant changes in November. Whereas the housing loan turnover of 46 million euro was just 5% larger year-on-year, the number of loans issued was smaller in November. Car leasing, on the other hand, has remained active, posting an annual growth of 58%.

The turnover of new loans is still not stopping the shrinkage in the banks’ loan portfolio. The stock of corporate and household loans declined by 107 million euro in November, to 14.4 billion euro by the end of the month. The stock of loans and leasing has decreased by 5.3% year-on-year. The forecasted slowdown in economic growth is likely to withhold credit demand in 2012 as well, so Eesti Pank expects the loan and leasing portfolio to contract by 1.4% in 2012.

Loan interest rates also remained almost unchanged in November. The average interest rates on housing loans and long-term corporate loans were 3.4% and 4.4%, respectively.

Overdue loans shrank the most in November. The stock of loans overdue by more than 60 days declined by 59 million euro over the month. By end-November, the share of overdue loans decreased to 5.3% of the loan portfolio. On the one hand, the repayment ability of enterprises and households improved and on the other hand, banks wrote off bad loans.

Deposits increased by 42 million euro in November. The total corporate and household deposit volume was 7.8 billion euro at the end of the month. This is 6% more than a year ago. Irrespective of the relatively low deposit interest rate, households prefer to save in bank accounts due to the high volatility of the financial market. Time deposits have been on the increase throughout the year, so by the end of the month, the share of such deposits was 51%.

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

Source: Bank of Estonia

Economic forecast by central bank

Economic growth is decelerating sharply due to weaker external environment

The Estonian economy was growing faster than expected during the first three quarters of 2011. Now the growth impetus is waning and uncertainties in the external environment are on the rise. Further developments in Estonia as well as in Europe depend on how problems in several euro-area sovereign bond markets are solved. Therefore, Eesti Pank forecasts that the Estonian economic growth will decelerate sharply in 2012. If the external situation deteriorates even more, a recession cannot be ruled out.

The spreading debt crisis and the increasing contagion risk have seriously undermined economic sentiment in both Europe and the rest of the world. Political tensions in several euro-area countries, accompanied by market distrust in proposed economic policy measures have also increased uncertainty. According to the Eurosystem’s forecast, euro-area inflation will be in the range of 2.6…2.8% this year and between 1.5…2.5% in 2012. The euro-area growth forecast is 1.5…1.7% for 2011 and -0.4…1% for 2012. The debt crisis in the euro area also markedly worsened the economic situation of Estonia’s main trading partners in the second half of 2011. Nevertheless, Estonia’s domestic economic imbalances have decreased compared to the situation a couple of years ago and this has boosted resilience to deterioration in the external environment. Weaker economic activity is alleviated by the ECB Governing Council’s recent months’ decisions to reduce the key interest rate to 1% and to offer additional liquidity to euro-area banks.

The sufficient capitalisation of banks operating in Estonia and the improved loan-to-deposit ratio provide a good basis for financing households and companies. Cash flows from loan repayment and growing deposits are sufficient to support the markedly higher new lending volumes. At the same time, it is likely companies and households are postponing borrowing due to the highly uncertain economic environment. As a result, the loan portfolio will shrink in 2012 as well.

The Estonian labour market has come up with several positive surprises this year. Employment has increased and unemployment has dropped. The expected economic sluggishness in 2012 may make employers want to cut the number of their employees again, but the situation will become aggravated only if there occurs a longer-term standstill or a recession.

This year’s robust economic growth has been accompanied by a faster-than-expected inflation rate. This was caused by a rapid hike in the price of energy and food commodities in the global market. Nevertheless, the external environment has put no extra upward pressures on prices since the first half of 2011. As a result, inflation in Estonia will slow in the last quarter of this year and in 2012, too. Wage pressures are not excessive at the moment and slowing economic growth is likely to hinder wage growth as well. In longer term, however, labour-market pressures may pose a threat to Estonia’s balanced economic development.

Fiscal policy is also facing greater challenges due to the external-environment uncertainty. It is very hard to assess the medium-term growth potential and the respective revenue level. Based on the 2012 state budget, the next year’s government expenditure growth will exceed GDP growth. This will postpone reaching a surplus target and may lead to inflated expectations.

See also the TABLE: Economic forecast by key indicators

See also Economic forecasts for 2011-2013 and presentation slides

Source: Bank of Estonia

Restriction of internet access unacceptable

Today at the conference on internet freedom being held in The Hague, Foreign Minister Urmas Paet said that peoples’ right to express themselves freely must apply in cyberspace as well. “Freedom of virtual expression is a human right and must be protected and promoted. The availability of the internet must also be supported and expanded,” he noted.

Foreign Minister Paet stated that what happened and is happening in many Arab countries is an example of how the internet and other modern-day information and communications technology solutions help with the spreading of democratic values. “Therefore we feel it is essential to introduce new technologies and make them accessible to people. Estonia is constantly sharing its experiences with implementing and using e-solutions with its development co-operation partners,” said Paet. “This year we have sent a civil expert in e-government to Albania, supported e-government training for state officials from Zambia, and helped increase the digital security capabilities of the Palestinian Authority,” said the foreign minister, giving examples of Estonia’s aid. Estonia’s e-solutions are being used in over 40 countries altogether.

The foreign minister also emphasised that, in addition to freedom, security must also be guaranteed on the internet, since the internet can be an environment for carrying out widespread violations of the law. “Cyber security and preventing cyber crimes is an important topic for all the countries in the world. At the same time, the fight against cyber crime must be carried out in such a way that it does not restrict freedom of speech and human rights,” said Paet. The foreign minister added that currently the only internationally binding instrument for hindering and preventing cyber crimes is the Council of Europe’s Convention on Cybercrime. “We call upon all countries that have not yet joined the convention to do so,” said Paet.

Topics discussed within the framework of the conference on internet freedom in The Hague included opportunities for governments to protect human rights on the internet and the role and responsibility of internet companies in ensuring internet freedom. Secretary of States of the USA Hillary Clinton and the foreign ministers of many other countries as well as representatives from international organisations, internet companies, periodical publications, and research institutions participated in the conference.

Yesterday Foreign Minister Paet also participated in the Google event on freedom of the press entitled “Google & Free Press Unlimited Event”.

Additional information:

Source: Estonian Ministry of Foreign Affairs

Dissappearance of sales tax is testing the competition

According to Statistics Estonia, the November CPI showed a 0.1% price growth, having increased by 4.2%, year-on-year. Inflation in the euro area was 3% in November, according to Eurostat’s preliminary estimate.

Inflation slowdown in Estonia shows that economic growth is losing impetus and inflationary pressures from the external environment are easing. During the past six months, the price level in Estonia has grown by 1.3%. At the same time a year ago, price growth was 2.5%.

The Estonian labour-market situation has improved, since the number of the employed has gone up. Wage growth acceleration accompanying this development has stepped up consumer purchasing power. However, it is likely that the consumption decisions of the Estonian households have been withheld by the deteriorating external economic outlook.

Global commodity prices have put no pressure on price growth in Estonia since spring. The near-term price growth of energy sources is attributable to the earlier oil price increase.

In 2012, the sales tax on several products and services in Tallinn will be abolished. The impact thereof on counter prices depends on the stiffness of competition and on the extent to which it used to affect counter prices. In general, indirect tax increases will be borne by consumers, at least partly.

Source: Bank of Estonia

Author: Martin Lindpere, Eesti Pank, economist