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Estonia: Economic and Political Outline
Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
Estonia became a member of the European Union on May 1st, 2004 and remains the only former Soviet country invited to join the OECD to this day (May 2010). Estonia has managed to move from a state-run and centralized economy to a dynamic market economy, liberalize by a succession of governments observing a strict budgetary orthodoxy while simultaneously modernizing the country. The country has stands out mainly thanks to its IT sector (the invention of Skype, mobile payment systems, internet voting, multifunctional electronic identity cards and initiatives in the sphere of cyber security).
As the so-called "Baltic Tiger," Estonia experienced an average annual growth of more than 8% in 2000-2007. The strong demand was supported by the large amount of foreign investment, rising wages and strong growth in household debt. This rapid rise in living standards was accompanied by a significant reduction of unemployment (4% in July 2008).
However, due to its dependency on foreign investment, the country was hit hard by the recession (-5.1% of GDP in 2008 and -14% in 2009) , which resulted in a lack of liquidity, damaged real estate market, rising exchange rates and a spike in unemployment (more than 15% of the workforce in June 2009). During the same yera, the average salary dropped by almost 5%.
After two years of very deep recession, in 2010 the growth became again strong and healthy. This trend continued and intensified in 2011, with a growth rate of more than 6.5%. The crisis has nonetheless left behind a high rate of unemployment (11.3% in 2011), which is however declining. Estonia is considered one of the most liberal economies in the world by the Heritage Foundation's 2010 Economic Freedom Index.
| Main Indicators | 2009 | 2010 | 2011 | 2012 (e) | 2013 (e) |
| GDP (billions USD) | 19.32e | 19.25e | 22.54 | 23.90 | 25.01 |
| GDP (Constant Prices, Annual % Change) | -13.9e | 3.1e | 6.5 | 4.0 | 4.2 |
| GDP per Capita (USD) | 14,410e | 14,405 | 16,880 | 17,908 | 18,753 |
| General Government Gross Debt (in % of GDP) | 7.2e | 6.6 | 6.0e | 5.6 | 5.3 |
| Inflation Rate (%) | -0.1 | 2.9 | 5.1e | 3.5 | 2.5 |
| Unemployment Rate (% of the Labor Force) | 13.8 | 16.9 | 13.5 | 11.5 | 9.5 |
| Current Account (billions USD) | 0.88 | 0.69 | 0.55 | 0.55 | 0.18 |
| Current Account (in % of GDP) | 4.5 | 3.6e | 2.4 | 0.7 | - |
Source: IMF - World Economic Outlook Database ; World Bank , Last Available Data
Note: (e) Estimated Data
Agriculture accounts for only 2.7% of the GDP and employs 3% of the active population.
The industrial sector, which represents 26.3% of the GDP, employs 33% of Estonian workers. The main industrial sectors of Estonia are the food industry (dairy products and meat processing), which accounts for 16% of the manufacturing industry, electronics (a traditional sector), chemical industry (which accounts for 6% of the manufacturing industry) and wood processing industry (this sector accounts for 24% of the manufacturing industry). The Estonian industrial sector was heavily affected by the economic crisis in 2008-2009 (-26.5%) and domestic and foreign demand were considerably reduced.
The services sector is the most developed, in particular transport and logistics, biotechnology and financial services. The sector accounts for 71% of the GDP employing 60% of the Estonian population. The telecommunications sector is the most performing one, Estonia has even acquired the nickname of E-stonia for its advanced progress in equipment and Internet research and development.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 4.0 | 31.3 | 64.1 |
| Value Added (in % of GDP) | 2.9 | 29.1 | 68.0 |
| Value Added (Annual % Change) | 5.7 | -4.8 | -0.4 |
Source: World Bank - Last Available Data.
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| Monetary Indicators | 2006 | 2007 | 2008 | 2009 | 2010 |
| Euro (EUR) - Average Annual Exchange Rate For 1 USD | 12.47 | 11.43 | 10.69 | 11.26 | 11.81 |
Source: World Bank - Last Available Data.
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Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation
Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
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Despite the international economic crisis of 2008-2009, foreign trade's contribution to the GDP represents more than 150%. Rich in oil shale, a large part of Estonia's energy production is based on this resource (80%), which allows it to be energetically self-sufficient. Estonia is a net exporter of electricity, especially to Finland, Latvia and Lithuania.
The European Union countries account for 70% of Estonia's foreign trade and the CIS countries account for 11% of the total exports. The main export trading partners of Estonia are: Finland, Sweden, Russia, other Baltic states, Germany and the United States. The main export goods are electrical and electronic equipment, wood and mineral products, metals, agricultural and food industry products, transport equipment, raw materials, textiles and electricity.
Its main import partners are: Finland, Lithuania, Latvia, Germany, Sweden, Russia and Poland. Estonia mainly imports electric & electronic equipment, machinery, vehicles, mineral fuels (oil), iron and steel.
| Foreign Trade Indicators | 2007 | 2008 | 2009 | 2010 | 2011 |
| Imports of Goods (million USD) | 15,677 | 16,027 | 10,139 | 12,284 | 17,579 |
| Exports of Goods (million USD) | 11,010 | 12,453 | 9,040 | 11,596 | 16,760 |
| Imports of Services (million USD) | 3,022 | 3,303 | 2,483 | 2,765 | 3,711 |
| Exports of Services (million USD) | 4,322 | 5,094 | 4,343 | 4,489 | 5,489 |
| Imports of Goods and Services (Annual % Change) | 7.8 | -7.0 | -32.6 | 8.8 | - |
| Exports of Goods and Services (Annual % Change) | 1.5 | 0.4 | -18.7 | 10.7 | - |
| Imports of Goods and Services (in % of GDP) | 79.1 | 75.8 | 59.1 | 72.2 | - |
| Exports of Goods and Services (in % of GDP) | 68.4 | 71.6 | 65.3 | 78.3 | - |
| Trade Balance (million USD) | -3,619 | -3,124 | -775 | -331 | - |
| Trade Balance (Including Service) (million USD) | -2,189 | -1,295 | 1,124 | 1,399 | - |
| Foreign Trade (in % of GDP) | 147.6 | 147.4 | 124.4 | 150.6 | - |
Source: WTO - World Trade Organization ; World Bank , Last Available Data
| Main Customers (% of Exports) |
2011 |
| Russia | 15.7% |
| Sweden | 14.3% |
| Finland | 13.7% |
| Latvia | 7.2% |
| United States | 6.6% |
| See More Countries | 42.5% |
| Main Suppliers (% of Imports) |
2011 |
| Russia | 11.3% |
| Germany | 9.2% |
| Finland | 9.1% |
| Sweden | 7.8% |
| China | 7.4% |
| See More Countries | 55.2% |
Source: Comtrade, Last Available Data
Source: Comtrade, Last Available Data
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For some information about political parties, the following website of the Parliament should be visited: http://www.riigikogu.ee.
Source: Worldwide Press Freedom Index 2011, Reporters Without Borders
Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
Map of freedom 2010
Source: Freedom House
Note: The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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Last Updates: May 2012