
The economic downturn in Estonia has continued for almost three years. How long should we wait for change for better? How are the EU Economy
affected by signals from the US?
The Economic downturn in Estonia has been almost three years. How long will we wait for
changes for better? How will the EU signals from the U.S. affect the EU economy?
The questions Rus.Postimees answered in direct air economist of Bank Estonia Natalya Vijlmann. See interview in the repeat!
Excerpts from the conversation:
– When and how will the EU economy begin to recover? At the current moment it has been stated that the European automotive industry is in crisis, aviation is on the edge of crash, inflation is not subsiding….
– In Europe as a whole there has been no such big downturn as in Estonia and Germany. But, unquestionably, there was a slowdown of the growth rate that was occurring on the background of the strengthening economies of the US and China. It became clear that it was necessary to increase the competitiveness of the economy of Europe.
On this background there were initiatives about reducing bureaucracy, reducing the tempo green turn, supporting clean industry. It has become clear that we need industry after all. So the cents are now spread in a more reasonable way.
Were heard complaints from businesses that they are being stifled by bureaucracy and rigid regulation. What’s happening is not a reversal backward, but a flexible approach to industrial enterprises. They have been listened to.
The goal is not just to grow the economy, but to grow the economy on a long-term basis. – How do signals coming from the U.S. affect the European economy? President Trump definitely said that the green economy is not a priority, “drill-drill-drill-drill”, and also apply protective duties on goods from Europe…. – – It’s likely that most of which he promised will be realized. Europe will have to reckon with this, they are ready to work in tough conditions. Trump is a shock therapy for Europe, a hard reminder that it is time to act. The EU’s single market must finally begin to work as a wealthy mechanism. There are 450 450 million people living here, who account for 17% of the world economy, the workforce is more skilled than in America or China, with better social guarantees. In Europe there are far more prerequisites for economic growth than anywhere else. The weakness of Europe is too much discussion about everything and too little action. We must recognize that all
So the benefit of the re-election of Donald Trump President of the US is already that Europe will have to take its future into its own hands. – What is the Basis for the optimism of Estonian commercial banks’ forecasts? The latter expect that Estonia’s economy will grow in the current year by 1.5-1.8%… – Not this is a big optimism. The decline is slowing, the economy has reached the bottom, and a slump is always followed by rises. Our partner countries are doing better, Euribor is decreasing. Of course, Estonia’s economy is having a hard time because taxes are rising and prices are rising quickly.There are positive implications as well. The last two quarters have ended without sleep (in the IV quarter of the annual decline was 0.1% – prim.ed.). So it is now expected to rise. – Will there be fewer bankruptcies? Recently the reported closure of Saaremaa Lihatööstus, Rocknord… – Of course, the closure of any business is a loss to the economy. But when the protracted downturn was just beginning, we predicted that there would be more bankruptcies, and unemployment – higher (in the data for the III quarter unemployment was 7.4%, in Ida-Virumaa it reached 13% – prim. In the previous crisis unemployment was as high as 10%. So it could have been worse. – How do you assess the current economic indicators? Drop GDP -0.7% (as of state for the III Q3 year decline ), inflation 3.8% …. – The Economy is in a heavy state . On a European background many Estonia’s indicators are off the scale to the negative side. Our country has taken one of the most strongest economic strikes. There are many causes: and the wind was blowing the wrong way, and the neighbors were hit by the crisis, and inflation was faster than those of other and etc.etc. – How will the continued increase in taxes affect the economy and the levels of life of the population? I recall that from July we will see an increase tax on turnover to 24%, the introduction of a payment for maintaining the necessary frequency, or a new electric tax… – In the growth of taxes, like any medal, there are two sides. From one side, it hits the pockets of the population, increases inflationAnd depreciates wages. With the other – getting the public finances in order. It is impossible to take every year to borrow loans at three percent of the GDP. This is not a very secure option. – Is it more reliable to take from the pockets of the population? – No, of course. But we have to supply ourselves with finances. – What will the taxpayer benefit from the prospect of increasing defense spending to 6%? – So far this is only a publicized number. Trump requires 5%, Estonia is targeting 6%, because we are on the EU and NATO border. It is not fact, that these funds will be taken from the pocket of the taxpayer. This amount could be borrowed. Perhaps it would be a European loan. For more in repeat!” Studio Postimees: Economy Estonia is now beginning to grow?” Photo: TairoLutter