Estonia 31st on IMD Competitiveness Scoreboard

Estonia was ranked in 31st place, two places higher than last year, in the 2012 World Competitiveness Rankings published by the Lausanne-based International Institute for Management Development (IMD) on Thursday. Compared with the rankings for 2011, Estonia has risen above the Czech Republic and Norway.

The most competitive of the 59 ranked economies in 2012 are Hong Kong, the United States and Switzerland. In places 4 to 10 come Singapore, Sweden, Canada, Taiwan, Norway, Germany and Qatar. Competing in the same league with Estonia are Chile in place 28, France in 29, Thailand in 30, Kazakhstan in 32, the Czech Republic in 33 and Poland in 34. Lithuania made a powerful rise from 45th last year to place 36 in the rankings for 2012. Finland was down two notches in place 17 and Russia improved its ranking by one notch to 48th. Latvia was not covered.

In addition to the rankings, the study measures competitiveness performance as a percentage relative to the winning nation. Estonia scored 66.9% against Hong Kong, 1.3 points lower than last year.

According to business leaders in Estonia, the most attractive and effective aspects of the Estonian economic environment are a competitive tax system, favourable prices, stable economic policy, and a business-friendly environment.

Estonia’s best showing in the IMD scoreboard so far was 19th place in 2006. Estonia has been taking part in the project since 2002 and the Estonian partner to IMD is the Institute of Economic Research.

Source: Estonian Review

Sales increased in all economic activities

According to Statistics Estonia, in April 2012 compared to April of the previous year, the retail sales of goods of retail trade enterprises increased 6% at constant prices.

This January the retail sales increased 15% compared to the same month of the previous year. In February the retail sales growth rate slowed down slightly, but still achieved a significant 12% growth. In March the retail sales growth rate decelerated even more and the retail sales increased then 6% during the year. In April the deceleration of the retail sales growth rate stopped.

In April 2012, the retail sales of goods of retail trade enterprises were 347.5 million euros. The retail sales in stores selling manufactured goods increased 9% compared to April 2011. The sales increased in all economic activities. The retail sales of pharmaceutical goods and cosmetics increased the most, where the retail sales grew 16% during the year. The growth in retail sales of these stores was influenced by the lower reference base of the previous year. Other specialized stores, such as stores selling computers and their accessories, photography supplies, books, sports equipment, games and toys were also successful in April. Compared to April 2011, the retail sales in these stores increased 13%.

The retail sales in grocery stores increased 5% compared to April of the previous year. The growth in retail sales of these stores was influenced by the continuous deceleration in the price increase of food products. If in the last three months the annual price increase of food products was within 3–4%, then in April 1.4%.

Compared to the previous month, in April the retail sales in retail trade enterprises increased 2% at constant prices. According to the seasonally and working-day adjusted data the increase was 1%. During the four months of 2012 (January–April), the retail sales in retail trade enterprises increased almost by a tenth at constant prices compared to the corresponding period of the previous year.

In April the revenues from sales of retail trade enterprises were 431 million euros, out of which the retail sales of goods accounted for 81%. Compared to April 2011, the revenues from sales increased by 13% at current prices. Compared to the previous month, this indicator stayed at the same level.

Retail sales volume index of retail trade enterprises and its trend, January 2002 – April 2012 (2005 = 100)

Diagram: Retail sales volume index of retail trade enterprises and its trend

Source: Statistics Estonia

Construction grew more than a fourth in Q1

According to Statistics Estonia, in the 1st quarter of 2012 compared to the same quarter of the previous year, the total production of Estonian construction enterprises in Estonia and foreign countries grew 28%, of which 29% on domestic market.

In the 1st quarter of 2012, the production value of construction enterprises amounted to 355 million euros, of which the production value of building construction was 234 million euros and the production of civil engineering totalled 121million euros. Compared to the same quarter of 2011, the volume of building construction in real terms increased 27% and the volume of civil engineering 31%.

The growth in construction volumes was caused mainly by the increase in the volumes in building construction on the domestic construction market. Although the new building construction has started slowly to upturn, the growth in building construction was caused mainly by repair and reconstruction work.

The construction volume of Estonian construction enterprises in foreign countries increased by a fourth compared to the 1st quarter of 2011. The increase was mainly caused by the building constructions. The share of the construction volumes in foreign countries accounted for 15% of the total volume of construction volume in the 1st quarter.

According to the data of the Register of Construction Works, in the 1st quarter of 2012, the number of dwelling completions was 707, i.e. about two times more than in the same period of 2011. About three quarters of completed dwellings were situated in blocks of flats. The majority of completed dwellings were situated in Tallinn. In spite of the consumer’s price sensitivity there was the demand for new dwellings with good location and quality on the construction market. In the 1st quarter of 2012, building permits were granted for the construction of 684 dwellings, which exceeded the number of dwellings in the previous quarter, but stayed by a third less compared to the 1st quarter of 2011. The most popular type of building was blocks of flats.

In the 1st quarter of 2012, the number of completed non-residential buildings was 192 with the useful floor area of 89,900 square metres – this was primarily made up of new agricultural, industrial and storage premises. Compared to the 1st quarter of 2011, the useful floor area and the cubic capacity of completed non-residential buildings increased.

Construction volume index and its trend, 1st quarter 2000 – 1st quarter 2012 (average of quarters of 2005 = 100)

Diagram: Construction volume index and its trend, 1st quarter 2000 – 1st quarter 2012

Source: Statistics Estonia

Government approves State Budget Strategy 2013-2016

The State Budget Strategy 2013-2016, approved by the Government today, sets the objective for the next four years to support economic growth and raise competitiveness, to provide people with a greater sense of security and to promote prosperity. The plans for next year include restoring the general government structural budget surplus and gradually  increasing it to one per cent of GDP by the year 2016.

Under the 2013 – 2016 State Budget Strategy and the 2012 Stability Programme, the general government structural budget will run a surplus over the entire strategy period. A sustained budget surplus will support economic growth and allow fiscal reserves to be restored.

The general government will reach a nominal surplus in 2014 and it will increase to 0.9 per cent of GDP by 2016. One of the objectives in the State Budget Strategy is to increase the amount of  fiscal reserves, to ensure stability in the future. In the event of better than expected economic growth, the Government will direct any revenue windfalls into reserves in order to restore a necessary buffer for the future. The structural position of the budget is the nominal budget position of the government sector less any one-off and economic-cycle effects.

“Over the next few years as well, the state budget will be run at a surplus under normal circumstances, as agreed, and some curbing of forecasts due to deterioration in the external conditions cannot change that attitude. Estonia’s economy is about to achieve the level of growth that it is capable of, and a sustained balanced budget will provide its citizens and businesses with greater confidence and a greater sense of security,” Minister of Finance Jürgen Ligi said. 

The economic forecast foresees that the debt burden of the general government sector will grow to 11 per cent of GDP in 2013, primarily due to the effect of the European Financial Stability Facility. In the State Budget Strategy the contributions to the European Stability Mechanism and to Eesti Energia’s share capital are also taken into consideration. The debt burden will then begin to decline and reach 9.5 per cent of GDP by 2016. Under the plan, liquid financial assets will begin growing at the general government sector level from 2016.

The Government will continue structural reforms in order to set expenditures more efficient and in accordance with state opportunities. For example, network of general education schools will be rearranged to provide pupils higher quality education and range of options to choose. In the area of social security, there is a plan to restructure the insurance system against accidents at work and occupational diseases. 

For the purposes of the efficient functioning of government sector , there are also plans to continue with the centralised governance of centralising support services, joint procurement and real-estate management and with financial-accounting developments, all contributing to increased efficiency in the future.

When embarking on new activities, Ministries will have to review the funding to date and set priorities in that area. Under the strategy, by 2016 the level of budgetary cost, as a ratio of GDP, will decrease 5.5 percentage points, to 32.2 per cent of GDP, compared to 2011, and the government agencies operational costs, as a proportion of GDP, will decrease by 1.3 percentage points, to 4.3 per cent of GDP.

The broad lines of tax policy will remain the same, and the overall tax burden declining to 32.3 per cent of GDP by 2016, thanks to labour tax cuts. The Government plans to improve tax receipts by improving the collecting of taxes, above all by curbing the proportion of the black economy. In a tax change, the plans include an increase in the alcohol excise duty by 5 per cent per annum over the strategy period. Alcohol is taxed under the principle of raising its excise rate at least at the same rate as the overall increase in prices, so that the relative availability of alcohol does not grow.

The strategy, consolidating fiscal policy objectives for the next four years, together with the stability programme, to be submitted to the European Commission, are part of a new, stronger framework for European cooperation and consistent with the fiscal and economic policy of the euro zone.

The State Budget Strategy constitutes the basis for the 2013 budget. The goal is to ensure sustainable budget policy in an intermediate perspective and to make the government’s activity in the management of the state and the areas of activity more effective.

See  Estonian Stability Programme 2012 

Source: Estonian Ministry of Finance

Record cinema attendance in 2010

According to Statistics Estonia, there were over 2.3 million cinema visits in 2011, which is the highest level of the last 19 years.

The cinema attendance was higher last in 1992, when there were 3.4 million cinema visits. Compared to 2010, the number of cinema visits increased by over 200,000 in 2011.

A total of 301 films were shown in the cinemas of Estonia in 2011. Most of them were imported from the United States of America and European countries (143 and 110 films, respectively). During the last years the share of the US films has decreased and the share of European films has increased.

40 Estonian films were shown in cinemas, which is also a record of the last two decades. The attendance of the Estonian films was over 236,000 persons, which is a tenth of the total number of cinema attendance. The most popular Estonian films were “Lotte and the Moonstone Secret”, “Kormorans”, “Idiot” and “Rattrap”. “Lotte and the Moonstone Secret” with 64,000 visits was on the remarkable sixth position with regard to the attendance chart of Estonian film distributors.

The average cinema ticket price, which had fallen slightly in 2010 in relation to opening several new cinemas, being 3.6 euros, increased again in 2011. The average cinema ticket cost 4.1 euros in 2011.

In 2011, 13 Estonian-made full length films were released, of which some were co-productions with foreign partners. Eight of them were feature films, four long documentaries and after several years there was released one full length animation in Estonia. In 2011, a total of 187 films were released in Estonia, of which 154 were short films and 33 full length films. The majority of them had their premiere in television.

See graph at Statistics Estonia website: Cinema attendance, 2000–2011

Ukraine suppliers claim millions from Estonian businessman

Estonian real estate developer Hillar Teder is finding himself target of claims that his business in Ukraine has not been above board, writes Äripäev.

The claims against Teder who is one of the businessmen who built up the O’KEY retail chain in Ukraine and Russia originate from the Ukraine Suppliers’ Association that a week ago published an article in under the headline “Adventures of an Estonian fraud in Ukraine.”

According to the article, Teder was responsible for the fact that when O’KEY closed its hypermarkets in Ukraine in 2009 because of the economic crisis and huge losses, the company still owes money to hundreds of suppliers, employees and the local tax authority.  The article’s authors claim that O’KEY owed Ukraine companies over 10 million euros plus 0.8 million euros to the tax authority.

Read more from BBN

Program of the Tallinn Old Town Days 2012

One of the main goals of this year’s Old Town Days is to remind people that behind any medieval house there was a courtyard hidden from the eyes of a stranger; that the Old Town is much more than just buildings with familiar facades. The orgnisers will reveal wonderful things that have been hidden in the courtyards,we will revive some moments of their long history.

XXXI Tallinn Old Town Days take place from May 26 – June 2.  See program here

See 2.06 program here

Coordinator: Tallinn City Centre Administration