In spite of the rapid economic growth of the last 5-6 years, Estonia is still not half as wealthy as the Western European countries.

Estonians earn about half of the average European income, despite the fact that the economic growth during the recent years has been very fast and the differences have been diminishing. Although the extremely vigorous period of economic reforms is now over, the changes that Estonia is presently going through are far more extensive than those in the developed countries. The privatisation has been completed and the rules governing the economy resemble those of the Western Europe. Calmer times have brought about a more balanced economic development – great crises and upheavals are now history – and quite a moderate increase in prices.

The Estonian economy is diverse – industry and transport, as well as commerce and different branches of services are all equally important. Due to the available natural resources Estonian economy largely relies on the branches related to the forest; Estonian energy sector is based on oil shale, a resource quite rare elsewhere in the world. Finland and Sweden are the most important trade partners. The Estonian economy profits significantly from the business generated by more than 2 million tourists a year, most of whom come from Finland.

Economic reforms and swift changes brought about an increase in unemployment in the 1990s, although a great number of people left Estonia during the first years of independence (in the period between the population polls of 1989 and 2000 the population of Estonia decreased by at least 194 thousand people, which is about 12%). Now the situation is gradually improving, the unemployment has dropped to less than 7% and the number of the employed is on the increase. Due to the rise in productivity and occasional shortage of specialists in certain areas, salary rise is quite marked as well.

In general, Estonian governments have been pursuing a balanced policy thanks to which the state budget has been more or less balanced or in surplus; during the recent few years the actual tax revenue has notably exceeded the expenditure, therefore the state loan burden is really modest.

Since June 1992 the official currency in Estonia is the kroon, and its rate was at first fixed to the German mark (1 mark = 8 kroons). After the introduction of the euro the kroon is tied to the euro (at a rate of approximately 15.645 kroons). The successful monetary reform also meant swift changes in banking and in the financial sector as a whole; the local financial sector is nevertheless very small. Estonian banking is characterised by a widespread use of the IT technologies – an impressive number of people own payment cards, internet banking has advanced rapidly, and the latest development – the m-payments (mobile payments) is all the rage.

Details about this article