Estonia

Capital: Tallinn

Local time:
It is %T:%M %A in Tallinn

GDP growth rate: 4.2% in 2013

FDI stock: 16 438 million USD in 2010

Economic trends

Estonia became a member of the European Union on May 1^st, 2004 and it is an attractive investment destination on the Baltic Sea (one of the fastest growing European markets in recent years), with a sound economy. A balanced budget (guaranteed by the Constitution), a free-trade regime, a fully exchangeable currency, a competitive commercial banking sector, and a foreign investment-friendly environment are some of the assets that have contributed to the country's success.

However, the country's economic situation, which was amongst the Baltic "tigers", has recently deteriorated. The 2008-2009 economic and financial crisis has deeply affected the country, its GDP had a drop of 14% (one of the highest in the world), resulting mainly in a lack of liquidity, a damaged real estate market, high exchange rates and a very high unemployment rate (more than 15% of the active population in June 2009). Estonia's economic activity diminished almost by 10% in the last quarter of 2008 and the country went into recession in 2009. The growth has slightly become positive in 2010, at about only 1%, and the forecast counts with an increase of more than 4% annually starting in 2011, thanks to the effects of the country's entry into the Eurozone on 1 January 2011. Estonia is considered by the Heritage Foundation's 2010 Economic Freedom Index as one of the most liberal economies of the world.

Main branches of industry

Agriculture accounts for only 3% of the GDP and employs 3.7% of the active population.

The industrial sector, which represents 24.4% of the GDP, employs 35.5% 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 72.6% of the GDP employing 60.3% 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.

International trade

Despite the international economic crisis, foreign trade's contribution to the GDP was positive in 2008-2009, at around 7%.  In 2009, exports had a drop of 25%. 

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.  Its main import partners are: Finland, Germany, Sweden, other Baltic states, Russia and Poland. 

The main export goods are electrical and electronic equipment, wood and mineral products, metals, agricultural and food industry products, transport equipment, raw materials and textiles. Estonia mainly imports electric & electronic equipment, machinery, vehicles, mineral fuels (oil), iron and steel.