Estonia, Financial Services, Loan, Markets and Companies

Both domestic and foreign debt liabilities increased by about the same amount and long-term debt liabilities for financing investment increased the most. Corporate debt has not changed much in relation to GDP in recent quarters, as debt liabilities and nominal GDP have grown at similar rates.

Corporate equity grew more slowly in response to lower profitability. The rapid fall of recent years in the ratio of debt to equity, which shows corporate financial leverage, came to a stop. The debt burden and financial leverage of the Estonian corporate sector have fallen a relatively long way in recent years compared to those in other European Union countries, and both indicators are lower than the EU average.

Household financial assets and incomes are continuing to grow faster than debt liabilities. Although the slower growth in the economy and in incomes has led growth in household financial assets to slow too, it remained quite fast and stood at 7% year-on-year at the end of the second quarter. Within that, household deposits and cash increased by some 8%. The growth in household debt liabilities has gradually accelerated, but it still remains slow and stood at 1.5% at the end of the second quarter.

Moderate borrowing and determined saving by households meant that the Estonian economy as a whole was a net lender in the second quarter of 2014. This means that more funds were invested abroad or returned there than were taken in from abroad, the central bank said.