Estonia

After centuries of Danish, Swedish, German, and Russian rule, Estonia attained independence in 1918. Forcibly incorporated into the USSR in 1940 - an action never recognized by the US - it regained its freedom in 1991, with the collapse of the Soviet Union. Since the last Russian troops left in 1994, Estonia has been free to promote economic and political ties with Western Europe. It joined both NATO and the EU in the spring of 2004.

Main Airports

Kärdla (KDL), Tallinn (TLL)

U.S. Embassy

Kentmanni 20, Tallinn
tel. (372) 66 88 100

Statistics

GDP: purchasing power parity:

$22.29 billion (2005 est.)

GDP - real growth rate:

9.6% (2005 est.)

GDP - per capita: purchasing power parity:

16,700 (2005 est.)

Inflation rate (consumer prices):

4.1% (2005 est.)

Labor force:

670,000 (2005 est.)

Exports:

$7.439 billion f.o.b. (2005 est.)

Exports - partners:

Finland 26.5%, Sweden 12.9%, Latvia 8.8%, Russia 6.5%, Germany 6.2%, Lithuania 4.8% (2005)

Imports:

$9.189 billion f.o.b. (2005 est.)

Imports - partners:

Finland 19.8%, Germany 13.8%, Russia 9.4%, Sweden 8.8%, Lithuania 6.1%, Latvia 4.7% (2005)

Population:

1,324,333 (July 2006 est.)

Population growth rate:

-0.64% (2006 est.)

Population Below Poverty Line:

NA (2000)

Major Industries:

engineering, electronics, wood and wood products, textile; information technology, telecommunications

Employing Workers: 151*

Registering Property: 23*

Enforcing Contracts: 20*

Closing a Business: 47*

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	Estonia	Region
Procedures (number)	6	9.4
Time (days)	35	32

Estonia Risk Assessment

Country Rating

Rating: A2

The political and economic situation is good. A basically stable and efficient business environment nonetheless leaves room for improvement. Corporate default probability is low on average.

Risk Assessment

After growing very rapidly, spurred by rising real wages and the expansion of credit, the economy began to slow early last year. Rising interest rates and the tightening of the conditions for extending credit led to a slowdown in spending on consumption and, linked with the end of the property boom, in investment. That trend should continue in 2008 with GDP growth easing to a more sustainable level. Sectors linked to property will be weakened, but companies should continue to invest albeit at a slower pace. Similarly, the employment of European structural funds should support public investment.

Inflation surged sharply in 2007 and should remain high in 2008 amid continuing high oil prices, increases in excise taxes, and persistent tensions in the labour market. In this context, adoption of the euro will be unlikely before 2011.

The expected import slowdown raises hopes of stabilisation of the current account deficit although it should remain very large. Foreign debt', notably resulting from financing granted by Nordic banking groups to their local subsidiaries, will continue to grow with foreign direct investment only covering the current account deficit to a very limited extent.

STRENGTHS

• Implementation of far-reaching reforms and maintenance of macroeconomic stability have fostered exceptionally rapid improvement in the standard of living.
• The country is known for the flexibility of its productive apparatus and the quality of the business climate.
• Estonia has rapidly modernised its industry with development of the electronics sector in particular.
• Public finances have been in surplus and government debt has been negligible.
• The very substantial presence of foreign banks has benefited the banking sector.

• Buoyant domestic demand and the high import-content of subcontracting-industry exports have generated large current account deficits.
• With the economy very open to foreign trade, sales performance abroad depends on international economic situation..
• High inflation has compromised chances for rapid admission to the euro zone.
• The expansion of credit, particularly for property, has been too rapid.
• The foreign debt burden, particularly in banking, has grown strongly.

• Agriculture
• Apparel
• Arts & Crafts
• Automobile
• Bags, Cases & Boxes
• Chemicals
• Computer Hardware & Software
• Construction & Real Estate
• Consumer Electronics
• Electrical & Electronics
• Energy & Environment
• Food & Beverage
• Furniture & Furnishing
• Health & Medicine
• Home Supplies
• Industrial Supplies
• Lights & Lighting
• Machinery
• Mineral & Materials
• Office Supplies
• Security & Protection
• Service
• Sports & Entertainment
• Telecommunications
• Textile
• Toys
• Transportation