Accor plans to expand to Estonia

Accor, the French hotel chain, is showing an interest in Estonia, with plans for a location in the heart of downtown Tallinn.

A member of the board of Palmgrupp OÜ, an Estonian real estate development company, says they have signed an agreement with Accor for managing two hotels, Postimees wrote.

The board member Janno Rokk, divulged no further information on the timetable, saying: “We are prepared to develop it when they come and they will come when the funding is in place.”

The development would take place on lots owned by OÜ Palmgrupp at Hobujaama 12 and 14a, the interchange where two sets of tram tracks meet and where a new shopping center recently opened.

Accor, which operates 3,555 hotels in 92 countries, would  bring its Adagio and Ibis trademarks to Estonia.

Source: ERR / Estonian Review

EBRD to invest EUR 20m in private equity in the Baltic states

The EBRD announced yesterday that it has agreed to provide an investment of up to EUR 20m to BaltCap Private Equity Fund II, L.P. for equity and equity-related investments in small and medium-sized enterprises and small mid-cap companies in Estonia, Latvia and Lithuania.

The fund has a target size of EUR 100 million and aims to develop Baltic companies into leaders in and beyond their region that can attract international investors.

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UK Prime Minister launches attack on EU migration

Äripäev writes that UK Prime Minister David Cameron has announced a crackdown on EU immigration, vowing to deport vagrants, restrict the right to benefits of foreign nationals and calling for new rules to stop “vast migrations”.

In an opinion letter published in the Financial Times, Cameron insisted that Europe has to reform to regain the trust of its people.

“Things have gone wrong under a system where 1m eastern Europeans settled in Britain after the round of EU enlargement in 2004,” the PM said

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Baltic Sea region report

Integrate. Compete. Grow
  • Growth in the region is set to improve after a weak 2013
  • Baltic Sea index: no gains in structural competitiveness
  • Reform push is needed to build competitiveness and growth

Growth in the region is set to improve after a weak 2013

The Baltic Sea region growth in 2013 will be just 1%. The situation is very diverse, ranging from a 0.6% contraction in Finland to a 4.3% expansion in Latvia. The cause of the slowdown is not only weak external demand, but also structural weakness pertinent to the region’s economies themselves. With the global outlook improving, we see the region expanding by 2.4% in 2014 and 2015 − still below potential. Swedish growth will speed up to 3%, supported by an improving labour market, fiscal expansion, and export recovery. Its key risk is the housing market and rising household debt. For Latvia and Lithuania, we forecast about 4% growth in 2014 and 2015 on the back of a strong labour market and better global growth. Similarly for Estonia with perhaps somewhat slower growth in 2014 as it struggles with a very weak growth this year. The key challenge for the three Baltic states is the labour market, i.e., to balance wage and productivity growth.

Baltic Sea index: no gains in structural competitiveness

The region is in the top 30% globally for its structural quality, but its ranking has not improved over the past five years. The region’s top strength is education; the weakest areas are foreign trade, tax policy, and financial markets. Finland has risen to the top, while Russia is still the lowest. Over the recent years, the most improvement has come from those with the lowest ranks – Poland and Russia – but others have been less ambitious. In Sweden, the speed of reforms has slowed, and it has slid down the rankings. The Baltic states have regained macro stability but have failed to improve their structural quality faster than others. This lack of progress − especially for the Baltic states, − where structural quality is significantly below that of the Nordics and Germany − will impair their growth going forward.

Reform push is needed to build competitiveness and growth

Improving competitiveness is a major source of growth when the global economy is weak. Key to improving competitiveness is to strengthen regional integration, and structural quality is essential to facilitate this. Most of the growth potential in the region thus can be unlocked by raising structural quality in the lowest ranking countries, i.e., Poland, the Baltic states, and above all, Russia, which often ranks way behind the others. Swedish structural quality is very strong but would gain from improvements in education, infrastructure, and entrepreneurship. In the Baltics, improvements are necessary across the board to lift them closer to the Nordics and Germany, but the most urgent ones are those to support productivity growth and help ease labour market overheating pressures. A major boost to innovation is necessary for Latvia and Lithuania, and also for Estonia, to make adequate use of their education quality.

Source: Swedbank