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Estonia Economy

    Economy—overview: Estonia's continued adherence to market reforms, disciplined fiscal and monetary policies, and a liberal free trade regime resulted in GDP growth in 1998 of 5.5% and a decrease in inflation to 6.5% from 11.2% in 1997. A high but slightly decreased current account deficit was estimated at 8.6%. The fall in GDP growth is largely due to the impact of Russia's financial crisis and reduced investment in emerging markets in the wake of the Asian financial crisis. Like other small emerging markets, Estonia will face difficulties in 1999 as a result of continuing fallout from Asia. Key events of 1998 were the start of official EU accession talks, banking sector consolidation—nine banks were reduced to five—and the important role that Swedish capital played in the large banks (Swedbank's acquisition of a majority stake in Hansapank has accounted for the large increase in foreign direct investment). The IMF urged Estonia to maintain a stable economy and good reputation in international markets and to avoid populist policies in the run-up to March 1999 parliamentary elections. The government completed restructuring of state-controlled Estonian Telecom, the sale of 49% of which will be the flagship privatization in 1999 and the largest public equity transaction in the Baltics. Estonia expects to join the World Trade Organization in 1999.

    GDP: purchasing power parity—$7.8 billion (1998 est.)

    GDP—real growth rate: 5.5% (1998 est.)

    GDP—per capita: purchasing power parity—$5,500 (1998 est.)

    GDP—composition by sector:
    agriculture: 6.2%
    industry: 24.3%
    services: 69.5% (1997 est.)

    Population below poverty line: 6.3% (1994 est.)

    Household income or consumption by percentage share:
    lowest 10%: 3.2%
    highest 10%: 28.5% (1996)

    Inflation rate (consumer prices): 6.5% (1998 est.)

    Labor force: 717,000 (1997 est.)

    Labor force—by occupation: industry 42%, agriculture and forestry 11%, services 47% (1996 est.)

    Unemployment rate: 9.6% (1998 est.)

    Budget:
    revenues: $1.37 billion
    expenditures: $1.37 billion, including capital expenditures of $NA (1997 est.)

    Industries: oil shale, shipbuilding, phosphates, electric motors, excavators, cement, furniture, clothing, textiles, paper, shoes, apparel

    Industrial production growth rate: 3% (1996 est.)

    Electricity—production: 8.065 billion kWh (1996)

    Electricity—production by source:
    fossil fuel: 99.96%
    hydro: 0.04%
    nuclear: 0%
    other: 0% (1996)

    Electricity—consumption: 5.581 billion kWh (1997)

    Electricity—exports: 1.2 billion kWh (1997)

    Electricity—imports: 210 million kWh (1997)

    Agriculture—products: potatoes, fruits, vegetables; livestock and dairy products; fish

    Exports: $2.6 billion (f.o.b., 1998)

    Exports—commodities: machinery and equipment 17%, textiles 16%, food products 8%, transport equipment 8%, mineral products 8%, chemical products 8% (1997)

    Exports—partners: Finland, Russia, Sweden, Germany, Latvia (1997)

    Imports: $3.9 billion (c.i.f., 1998)

    Imports—commodities: machinery and equipment 21%, transport equipment 12%, foodstuffs 10%, minerals 9%, textiles 8%, metals 8%, chemical products 8% (1997)

    Imports—partners: Finland, Germany, Russia, Sweden, Japan, US (1997)

    Debt—external: $270 million (January 1996)

    Economic aid—recipient: $137.3 million (1995)

    Currency: 1 Estonian kroon (EEK) = 100 cents

    Exchange rates: krooni (EEK) per US$1—13.473 (January 1999), 14.075 (1998), 13.882 (1997), 12.034 (1996), 11.465 (1995), 12.991 (1994); note—krooni are tied to the German deutsche mark at a fixed rate of 8 to 1

    Fiscal year: calendar year

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Revised 1-Mar-99
Copyright © 1999 Photius Coutsoukis (all rights reserved)