Estonia: Economic growth in Estonia is expected to pick up pace– as is also indicated by an economic survey carried out by the German-Baltic Chamber of Commerce
The prognosis for the Estonian economy for 2016 looks good. The European Commission expects the Estonian GDP growth rate for 2016 to reach 2.1%. According to these estimates the growth rate of the Estonian economy is assumed to exceed the European Union average. This optimistic outlook is shared by German entrepreneurs in Estonia: according to an economic survey by the German-Baltic Chamber of Commerce, 28% of the entrepreneurs taking part are convinced that 2016 will be good for business. The reason for the meagre economic growth rate during 2015 (0.9%) was a drop in foreign demand. Caused by EU economic sanctions against Russia and continuing economic difficulties in the Finnish economy, this still continues to burden Estonia. Overall lower oil prices and cheaper energy from Scandinavia are putting a strain on Estonia’s industrial sector (mining, chemical and energy sectors).
The strongest driving force in 2015 was private consumption, backed by growth in real wages and tax reductions. Direct investment by German companies during 2014 made up to 1.9 per cent of total foreign investment. Of the entrepreneurs participating in the survey, 43% are considering increasing their investment in Estonia in the upcoming year. Moreover, entrepreneurs seem to be optimistic regarding the position of their own enterprises, with 97 per cent of those surveyed estimating the situation of their company as either good or satisfactory. Their optimism and the investor-friendly taxation system in Estonia will probably lead to an increase in direct investment. Investment in gross fixed assets and in equipment during 2016 should add to the overall flourish of the economy. Upcoming EU subsidies for infrastructure development and development of the energy supply network are likely to add to this. A healthy public finance sector and good education level along with reasonable labour costs constitute the advantages the country has to offer. In short: the prognosis for a successful economic year in 2016 looks good.