Analytics, Crisis, Economics, Estonia

The leading researcher of the institute Leev Kuum noted at the press conference on Friday, July 3, that although the overall deterioration of the economic situation in Estonia continued in the second quarter of 2009, experts’ expectations for the improvement of the situation in the second half of the year have grown slightly since March.

“Although most experts estimate that in six months the economic situation is more similar or even worse, optimism has grown a little,” he noted. “The economic climate index has also improved, which could be construed as the economy having already been to the bottom,” he explained.

According to Kuum in improving Estonia’s situation, the developments in the global economy in the second half of the year will be of greatest importance. If the developments will be favourable, exports and domestic demand might grow.

He said that the most urgent problem involved in the economic crisis is the unemployment rate – in this respect, the improvement of the situation might take a long time.

“What is going on right now, is a test for the adjustability,” he said. “Unfortunately, the State or the enterprises have not been able to take steps to create new jobs – this is most regrettable,” noted Kuum. He estimated that the unemployment rate might remain relatively high, even when the economic growth will be restored as enterprises will try to cut costs by keeping the number of employees low.

Director of the Institute of Economic Research Marje Josing said that there is a risk that the economy might stay low for a long period of time as the international competitiveness of Estonian enterprises is still low.

According to her, the companies’ confidence towards the future is still low and it even deteriorated in June, probably due to the economic policy decisions linked to the negative supplementary budget.