Estonia made significant progress after regaining independence in 1991 by adopting an open market policy. This helped them to become a liberal market economy. In 2010, Estonia decided to join Eurozone and in January 2011 they adopted Euro.

The country’s Gross Domestic Product (GDP) at current prices for 2010 was EUR 14.5 billion, compared to EUR 13.86 billion in 2009.

(Source: Ministry of Statistic)

 

(Source: Ministry of Statistics)

The country’s GDP growth dipped to -5.1% in 2008, and further to -13.9% in 2009. The GDP is expected to show a positive growth of 2.4% for 2010 due to the increase in exports.

The nation’s GDP per capita at current prices was EUR 10,341.8 in 2009. The GDP per capita, PPP was USD 17,695 (2009), decreasing from USD 20,327 (2008).

(Source: Ministry of Statistics, dfat.gov.au)

The nation’s gross national income (GNI) per capita was EUR 10,101.3 in 2009, compared to EUR 11,365.6 in 2008.

(Source: Ministry of Statistics)

Trade

 

(Source: Ministry of Statistics)

In 2010, exports in Estonia amounted to EUR 8,747.2 million, while imports were valued at EUR 9,265.8 million. This created a deficit of EUR 518.6 million in the balance of trade.

Individual tax

In 2011, income tax on individual incomes in Estonia is 21%. The Non-taxable amount, or the annual basic exemption per year, is EUR 1,728.

(Source: Estonian Tax and Custom Board)

Corporate tax

Standard corporate tax in Estonia is 21%.

(Source: Estonian Tax and Custom Board)

In Estonia, unemployment insurance premium paid by employer and employee is withheld at a rate of 1.4% and 2.8% (of their gross salary) respectively.

(Source: Estonian Tax and Custom Board)

The standard rate VAT in the country is 20%. Inheritances or gifts are not charged with any kind of tax in the country. However, land tax in the country is charged between 0.1% and 2.5% of the land’s value.

(Source: worldwide-tax.com)

Inflation rate

Estonia experienced a steep rise in inflation, reaching 10.4% in 2008. However, inflation in the country has declined from that high to -0.1% in 2009. The inflation, in terms of consumer price change (annual %), for 2010, was registered at 3%.

 

(Source: Ministry of Statistics)

 

Foreign direct investment

 

In 2010 (up till the third quarter), Foreign Direct Investment (FDI) inflow was EUR 866.67 million as compared to EUR 1,209.04 million in 2009.

(Source: Central Bank of Estonia)

Banking sector assets

The table below displays the assets of the Monetary Financial Institutions of Estonia.

Currency Unit: Estonian Kroon (EEK)

Aggregated balance-sheet of Monetary Financial Institutions (EEK million)
	31st December 2010	30th September 2010
Lending to residents	243,372.9	249,180.1
Holdings of securities other than shares issued by residents	1,749.3	1,724.5
Holdings of shares/other equity issued by residents	853.0	1,302.8
External assets	96,720.4	100,076.0
Fixed assets	1,050.3	979.7
Remaining assets	6,532.2	5,719.9
Total Assets	350,278.1	358,983.0

(Source: CentralBank of Estonia)

The table below displays the assets of commercial banks in Estonia.

Currency Unit: Estonian Kroon (EEK)

Aggregated balance-sheet of commercial banks (EEK million)
	31st December 2010	30th November 2010
Cash and cash balances with central banks	43,436.4	40,831.1
Financial assets held for trading	1,028.2	1,303.6
Financial assets designated at fair value through profit or loss	9,233.6	10,782.6
Available-for-sale financial assets	17.2	17.5
Loans and receivables (incl. financial lease)	227,766.0	230,760.1
Held-to-maturity investments	1,912.9	2,037.6
Investments in associates and subsidiaries	19,200.7	20,236.4
Derivatives - hedge accounting	103.2	99.2
Tangible assets	656.3	643.9
Intangible assets	82.7	49.6
Tax assets	43.8	41.4
Other assets	2,847.2	1,672.8
Non-current assets and disposal groups classified as held for sale	24.0	24.8
Total Assets	306,351.9	308,500.7

(Source: CentralBank of Estonia)

Consumer price index (CPI)

The country’s CPI in January 2011 was 179.34.

(Source: Ministry of Statistics)

Base, December 1997 = 100

The CPI in Estonia is steadily rising. The index figures for 2010 reached the highest mark of 179.38, indicating the increase in the prices of consumer goods since 1997.

Interest rates on time deposits

	12/31/10	11/30/10	10/31/10	09/30/10	08/31/10	07/31/10
EUR NOMINATED	1.33%	0.97%	0.99%	0.85%	1.04%	0.95%
up to 3 months	0.99%	0.87%	0.84%	0.74%	0.87%	0.80%
3 - 6 months	1.61%	1.55%	1.37%	1.33%	1.81%	1.22%
6 - 12 months	2.03%	1.32%	1.31%	0.92%	1.42%	0.94%
over 1 year	4.68%	1.28%	2.44%	2.36%	2.66%	2.55%

(Source: Central Bank of Estonia)

The average lending rate on credit institutions in December 2010 was 7.15%.

(Source: Ministry of Statistics)

Money supply (currency in circulation)

According to the Central Bank of Estonia, money in circulation in 2010 was EEK 76,788 million.

 

(Source: Central Bank of Estonia)

M1: currency in circulation in the economy (currency in circulation, excluding vault cash of credit institutions and savings and loan associations) + residents' demand deposits in MFIs.

M2: M1 + residents' deposits with agreed maturity up to 2 years and deposits redeemable at notice up to 3 months with MFIs.

M3: M2 + resident money market fund units, repos and debt securities up to 2 years.
Credit aggregate - loans granted and fixed-rate debt securities acquired by MFIs.

Government expenditure

Government expenditure in Estonia exceeded revenues in 2010, amounting to EUR 6,260.3 million, with a deficit of EUR 243.6 million.

 

Expenditure of Government of Estonia (Million EUR)
	2009	2008
Intermediate consumption	1,062.95	1,139.47
Compensation of employees	1,772.93	1,830.00
Subsidies	137.44	161.45
Property income	44.69	37.61
Current taxes on income, wealth etc.	3.21	3.36
Other current transfers	259.15	237.09
Capital transfers	99.88	189.29
Gross capital formation	716.69	869.98
Acquisitions less disposals of non-produced non-financial assets	-49.56	-19.60
Net lending (+)/Net borrowing (-)	-243.54	-459.28
Total general government expenditure	6,260.3	6,421.6

(Source: Ministry of statistic, Central Bank of Estonia)

Official exchange rate

Dollar rate per EUR in 2010 was registered at 1.33. The exchange rate for 2009 was 1.44 USD per EUR.

(Source: European Central Bank)

Government finances

Fiscal balance

Fiscal deficit for 2010 was estimated at -1.2% of the GDP.

 

(Source: Central Bank of Estonia)

Total revenue (2009)

The country's revenue in 2009 amounted to EUR 6,016.74 million, increasing 1% from 2008.

Revenue of Government of Estonia (EUR Million)
	2009	2008
Market output (for own final use and payments for other non-market output)	349.57	364.46
Taxes on production and imports	2,062.63	1,947.17
Property income	319.88	242.47
Interests	66.72	111.45
Dividends	234.57	111.26
Property income attributed to insurance policy holders	0.15	0.15
Rents	18.44	19.61
Current taxes on income, wealth etc.	1,044.87	1,277.09
Social contributions	1,842.45	1,911.83
Other current transfers	183.45	149.64
Non-life insurance claims	0.64	1.05
Current transfers within general government	769.87	809.1
Current international cooperation	122.63	79.26
Miscellaneous current transfers	60.18	69.33
Capital transfers	213.89	69.66
Other capital transfers and investment grants	213.89	69.66
Total	6,016.74	5,962.32

(Source: Central Bank of Estonia)

Tax revenue

In 2010, the total tax revenue was EUR 4,695.81 million.

(Source: Ministry of Statistics)

Current account balance - surplus/deficit

Estonia registered current account surplus in 2009, with a balance of EUR 627.7 million. However, in previous years, the country’s current account balance was in deficit. For example, in 2008, the current account deficit was EUR 1,567.9 million.

(Source: Central Bank of Estonia)

Balance of payments

Balance of Payments (EEK Million)
	2010			2009
	Q1	Q2	Q3
Current account	675.6	1,341.4	3,277.0	9,822.0
Goods and services	2,017.3	3,698.4	6,048.4	12,293.0
Income	-1,875.2	-3,117.9	-3,159.7	-5,955.1
Current transfers	533.5	760.9	352.4	3,484.0
Capital and financial account	-4,039.6	1,721.8	-11,523.7	-8,230.1
Direct investment	2,192.2	4,911.6	2,438.0	1,561.3
Portfolio investment	419.8	-4,543.1	-3,463.6	-22,562.8
Financial derivatives	44.4	195.5	264.3	195.8
Other investment	-8,833.0	-170.2	-12,400.1	6,565.6
Reserves Assets	1,705.7	-3,286.0	9,008.7	-32.1
Errors and omissions	1,658.4	222.7	-762.0	-1,559.7
Overall balance	-1,705.7	3,286.0	-9,008.7	32.1

(Source: Central Bank of Estonia)

The overall current balance at end of the third quarter of 2010 was a deficit of EEK 7,428.4 million. This is a drop from 2009, when the overall balance was in surplus of EEK 32.1 million.

Labour force in Estonia was 686,800 in 2010, decreasing 0.6% from the previous year’s population of 690,900. Females accounted for about 50% in 2009.

Total labour force participation rate in Estonia was 66.4% for 2010. For females, the participation rate was 62.8%, while for males, it was 70.5%.

Employment rate in country declined in 2010 and registered at 55.2%, compared to the previous year’s rate of 57.4%.

(Source: Ministry of Statistic)

The unemployment rate in the country increased in 2010 to 16.9%, compared to 13.8% in 2009. Total number of unemployed people in the country was 115,900 in 2010, increasing from 21.9% from 2009.

 (Source: Ministry of Statistics, Central Bank of Estonia)

Minimum wage

In Estonia, the average monthly gross wage is EUR 814 (2010). In 2009, the average monthly gross wage and salaries was EUR 784.

The minimum wage prevailing in the country in 2011 is EUR 278.02, this has remained unchanged since 2008.

(Source: Ministry of Statistic)

Level of unionisation

Estonian Trade Union Confederation (EAKL) and Estonian Employees' Unions' Confederation (TALO) are the two major confederations of trade unions in Estonia.

EAKL is made up of 19 branch unions, and represents officials from state and municipal government, workers in education system, health care, transport, industries, as well service employees.

Some Member Unions of EAKL are –

• Association of Estonian Energy Workers' Trade Union
• Education Workers' Trade Union
• Estonian Airline Aviation Trade Union
• Seamen's Trade Union
• Railway Employees' Trade Union
• Federation of Estonian Metal Workers' Unions
• Estonian Forest Workers' Trade Union
• Estonian Transport Workers' Union

TALO includes trade unions and associations from the following trade unions:

• Estonian Broadcasting Professionals' Union
• Journalists' Union of Estonia
• Estonian Theatre Union
• Estonian Professional Association of Engineers
• Estonian Rural Agricultural Labour Union

• Trade Union of Tallinn Customs Officials  

  (Source:talo.ee, eakl.ee)

The constitution established Estonia as an independent and democratic republic, wherein the supreme power is vested in the people. The country’s citizens vote and elect the Parliament calle the Riigikogu.

Riigikogu is a unicameral parliament comprised of 101 members, who are directly elected for a term of four years.

The president is the Head of State elected by the parliament for five years. The President has various executive powers including the power to appoint high grade government officials. Additonally, the President is the leader of the nation’s defence and represents the Republic of Estonia in international relations.

The executive powers in the country are vested in the Prime Minister, who also heads the government. Parliament has the authority to appoint, and if needed to recall, the Prime Minister. The Parliament can also dismiss the government after consulting the President.  Additonally they can enforce elections if the government loses the vote of confidence in the parliament.

The Estonian Reform Party, Estonian Centre Party, Estonian People's Union, Res Publica, Pro Patria Union and Social Democratic Party make up the major political parties in the country.

The current President of Estonia is Toomas Hendrik Ilves, who has been in power since October 2006. Andrus Ansip is the current Prime Minister. He was appointed as Prime Minister after forming a coalition government with conservative Pro Patria – Res Publica and the Social Democrats.

The government recently made significant decisions, such as plans to cut taxes, and increase spending on defence. It also decided to adopt the Euro and proceeded to obtain Eurozone membership.

(Source: estonia.eu, eesti.ee, commin.org, BBC)

Regulatory environment in estonia

The country’s economic freedom score is 75.2, making its economy the 14^th freest in the 2011 Index of Economic Freedom. Estonia ranks fifth out of the 43 regional countries in the Europe. Estonia’s overall score is above the global and regional averages.

(Source:Heritage.org)

Corruption perception

The Corruption Perceptions Index (CPI) is a survey to measure the perceived level of corruption across countries worldwide. Estonia is ranked 26^th on this list which indicates that the corruption levels in public departments in the country are fairly low, especially as compared to neighbouring nations such as Russia and Latvia.

Estonia climbed in CPI rankings and is currently 27^th, with a score of 6.6.

(Source:transparency.org)

Freedom of information

The media, by being autonomous, has been a major force for bringing about transformation in the Estonian society.

(Source:old.estinst.ee)

Estonia is ranked 9^th on the world Press Freedom Index 2010, with a score of 2.00 indicating that media in Estonia is not restricted.

(Source: rsf.org)

Newspapers

Major newspapers in the country include

• Postimees
• Eesti Paevaleht
• Ohtuleht
• Maaleht
• Aripaev

(Source: BBC)

Judicial system

The judiciary system in Estonia is divided into three levels - 

• Supreme Court of Justice
• Courts of appeal (circuit courts)
• Courts of first instance (county and city courts and administrative courts)

The Supreme Court in Tartu is the highest court of justice and also functions as the constitutional court.

All of the courts are independent and judges are appointed for life, and may not hold any other elected or appointed public offices.

The Estonian legal system is subject to international law as well as European Union law. The courts of appeal are situated in Johvi, Tartu and Tallinn.

(Source: Ministry of Justice)

The total population of Estonia in January 2011 was 1,340,122, hence it is decreasing at a rate of about 0.5% since 2005.

 (Source: Ministry of Statistics)

The gender ratio in the country is imbalanced, there are about 85.6 males for every 100 females in the country.

(Source: UN)

The average life expectancy in Estonia is 69.8 years for males and 80.07 years for females (2009).

(Source: Ministry of Statistics)

Population below 14 accounts for 15.13% of the total population (2010). 27.1% women and 17.2% men (% of total population) are above 60 (2010).

International migrant stock, till mid 2010, was recorded at 182,500 people, contributing 13.6% to the entire population.

(Source: Ministry of Statistics, UN)

The country’s urban population declined at an annual rate of 0.3% between 2005 and 2010. Similarly, in the same period, the rural population declined at a rate of 0.4% per year.

 (Source: Ministry of Statistic, UN)

Ethnic groups in Estonia include:

Estonians are predominantly Lutherans. However, other communities in the country include Greek Orthodox, Russian Orthodox, Baptist, Methodist, Roman Catholic and others.

(Source: Estonia.eu)

The country ranks 34^th out of 169 countries on the Human Development Index 2010 (HDI) conducted by the United Nations. The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income).

(Source: UNDP)

The adult literacy rate, as well as as the rate for those between 15 and 24, from 2005 to 2008, was estimated to be at 100%.

(Source: UNICEF)

The Estonian education system includes:

• Pre – School
• Primary and lower secondary school
• Upper Secondary education
• Vocational education and training
• Higher education

(Source: hanse-parlament.eu, Ministry of Statistics)

Government expenditures on education in the year 2009 were EUR 970.38 million.

Expenditure of General Government on Education	2009 (EUR million)
Gross capital formation	105.71
Acquisitions less disposals of non-financial non-produced assets	3.94
Compensation of employees	569.73
Subsidies	0.52
Social benefits and social transfers in kind	41.14
Intermediate consumption	225.02
Other taxes on production and current taxes on income, wealth, etc	1.00
Other current transfers	21.40
Capital transfers	1.90
Total expenditure	970.38
Final consumption expenditure	760.54

 

(Source: Ministry of Statistics)

Health care

The health care system in Estonia is ranked fourth in the EU study on healthcare.

However, the country is facing major challenges with premature mortality by external causes and increasing risks due to unhealthy life style, which includes: overuse of tobacco, low level of physical activity, alcohol abuse amongst the adolescent and obesity. Despite this, positive trends remain in the high vaccination rates and decreased incidences of communicable diseases.

The number of hospitals in 2008 was 60, with 57.2 hospital beds per 10,000 inhabitants.

The health care system is funded by the government, mainly through social payroll tax, which  makes up two thirds of total health care expenditure. The United Nations Development Programme (UNDP) recorded that expenditure on health amounts to 4.1% of the GDP.

(Source: haiglateliit.ee, UNDP)

Expenditure on health in 2009 was EUR 775.36 million.

(Source: Ministry of Statistics)

Mass public transit

The systems of mass public transport in the country includes roads (buses and cabs) and railways, which operated by Estonian Railways.

Public transport is free in the country for children till the age of 7. 

Tallinn, the national capital, offers discounted tickets for school children, students, retired people, and those who are parents of three or more children.

Public bus transport is well organised and offers good connections between cities and over long distances.

Total number of passengers commuted by bus, on local as well as on highway lines, at the end of third quarter of 2010, was 7,025,300.

(Source: euraxess.ee, Ministry of Statistics)

Roadways:

As of January 1, 2010, the length of the entire road network was 58,034 kilometres, of which 16,472 kilometres were national roads.

(Source: mnt.ee)

Railways:

The United Nations Economic Commission for Europe (UNECE) recorded the total length of railway lines operating in the country in 2009 as 1,196 kilometres.

(Source: UNECE)

Ports:  

There are 25 ports in Estonia. The major ports in country include - Port of Dirhami, Loksa Shipyard, Port of Tallinn, Montu Harbor, Manilaiu Harbour, Lehtma Harbro, and Virtsu Harbour.

(Source:world port source)

Airports

(Source: Air charter world)

Telecommunications networks

As of June 2010, 969,700 people, 75.1% of the total population, used internet services. This is an increase from 2007, when the number of people using internet services was 760,000 or 57% of total population.

(Source:internetworldstats.com)