Growth of debt in the private sector is still slower than GDP growth

Households and businesses took on more new loans at the start of this year than they did in the previous couple of years, but their indebtedness has continued to fall as earlier loans are repaid and incomes rise. The indebtedness of the real sector measured as the ratio of debt to GDP fell to 140% by the end of the first quarter. This means that the indebtedness has fallen by 27 percentage points from its peak three years ago and has returned to its level of 2007.

The financial position of households and businesses was also improved in the first quarter by growth in deposits and cash as well as the reduction in debt. The more balanced financial position reduces their vulnerability to any potential risks from the external environment. The financial savings of households, which are their deposits and cash held in hand, grew at an annual rate that reached 8% by the end of the quarter. Although corporate deposits in banks in Estonia were at around the same level that they were at the end of last year, deposits held abroad increased by over 100 million euros during the quarter.

The Estonian economy as a whole was a net borrower in the first quarter. This means that the country as a whole took in more funds from abroad than it invested there. This was largely led by the general government, which had a budget deficit as usual in the first quarter caused by payment of tax refunds.

Source: Bank of Estonia

Author: Taavi Raudsaar, Financial Sector Policy Division of Eesti Pank

Estonia is a relatively low-stress country

Estonia is a relatively low-stress country, shows the Most Stressed-out Nations in the World survey by Bloomberg:

The most stressed out nation was Nigeria and the least-stressed was Norway. Estonia ranked 52nd.

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Swedish report urges Estonia to give up oil shale energy

A climate change report of the Swedish Air Pollution and Climate Secretariat calls on Estonia to drop oil shale energy, emphasizing that the emerging green economy must offer work to released miners and other oil shale sector employees in the northeastern Virumaa region, the Estonian Renewable Energy Association reports.

The report that surveys eight countries says that carbon dioxide emissions in the Nordic and Baltic region should be reduced by 70 percent by 2020 and by 95 percent by 2030 through efficient use of existing technologies.

It puts emphasis on energy saving in buildings and transport, and suggests giving up the use of coal, oil shale and peat to produce electricity and heat, cutting back drilling for oil and gas in Norway and concentrating on clean energy production.

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China’s Jilin province opens a representation in Tallinn

An Estonia-China business forum sponsored by Enterprise Estonia (EAS) took place in Tallinn on Friday, within the framework of which the business representation for North and East Europe of China’s Jilin Province was also opened.

In addition to taking part in the forum, members of the Jilin province business delegation will meet with Estonian entrepreneurs and tour production enterprises, a spokesman for EAS told BNS. The companies to be visited by the Chinese delegation include furniture maker Tarmel, steel structures manufacturer E-profiil and science park Tehnopol, he said.

Previous meetings have established mutual trust and there are good prospects for even closer co-operation, EAS board member Martin Hirvoja said. “A year ago in August co-operation in renewable energy got started. Now we have included fields like agriculture and wood processing,” he explained.

MP Tõnis Palts observed at the opening of the business representation that Estonia has a big advantage in that reinvested profit is exempt from corporate income tax which makes the Baltic state the best place for Chinese businesses to set up headquarters when expanding to the European market.

The head of the delegation, director general of the department of commerce of Jilin province Cong Hongxia, said that opening of the representation in Estonia will raise bilateral co-operation to a new level. The representation will also serve other eastern and northern member states of the European Union.

Last fall EAS and the Chinese company Jilin New Energy Investment Co. Ltd. signed an investment and cooperation agreement under which companies from Jilin province will invest 130 million euros in renewable energy sector in Estonia.

EAS has had a business representation in China since 2010. The Chinese delegation is staying in Estonia from 19-21 July.

Source: Estonian Review / BNS