Banks, Covid-19, Direct Speech, Economics, Estonia

The Estonian economy got more support than was expected during the first wave of the crisis from export markets, and so the decline in the economy in spring and summer was smaller than had been feared. “The support from export markets that softened the impact of the crisis will not necessarily be there again in the second wave”, said Mr Müller.

Despite the good news about the development of vaccines, uncertainty about the future is extraordinarily high. Different scenarios drawn up by the European Central Bank suggest that economic growth in the euro area in the year ahead could be close to zero or could accelerate to 9%. This makes it important for Estonia to remain ready to support the branches of the economy that suffer most from the crisis.

Possible permanent changes should also be taken into account. The crisis has caused employment to fall by more in Estonia than in most other European countries and some of the negative impact may arrive with a lag. “More attention than before needs to be paid to increasing labour mobility and retraining. Rather than providing the emergency first aid that it did in the first wave, the support from the state should now help the economy to adapt to changes that may well be permanent”, said Mr Müller.

He pointed out that clearly defined support measures from the government would help reduce uncertainty in the economy. It should be clear at the same time though that the support measures can only be temporary and short term.

Madis Müller was speaking on Thursday at a panel discussion at a conference on accounting and taxes hosted by the business consultancy PricewaterhouseCoopers (PwC).