baltic states and belarus real estate market review - Colliers

Real Estate Market Review 2011 | Estonia Economic Overview
Economic Overview
The economy of Estonia bottomed-out in 2009 and is steadily improving with a quarterly GDP
increase of 6.6 per cent in the Q4 2010 on Q4 2009 YOY. In 2010, total annual GDP grew by 3.1
per cent.
Several confidence indicators confirm a turn for the better, illustrating that economic activity in
Estonia reached it’s low in the second half of 2009 before a turnaround in 2010. According to
Ministry of Finance forecasts, the economic conditions are expected to continue to improve with
GDP growth forecasted at above 4 per cent in 2011 and 2012. Growth is expected to be led by
exports, driven by a faster-than-expected recovery in demand from main export partners such
as Sweden and Finland.
The consumer price index increased 3.0 per cent in 2010 on the 2009 average. Since March
2010, the consumer price index has increased (Year on Year) by 3 per cent, driven by growth in
the price of motor fuel, electricity, heating energy, food and beverages. Rapid inflation (as there
was in the second half of 2010) is not expected to continue in 2011 and remain only slightly above
the euro-area average although Euro adoption will also increase price growth in 2011.
A decrease in year on year monthly retail sales of retail trade enterprises that had lasted for
almost two and a half years, turned around with a 1 per cent rise in September and October
2010. In November and December the growth in retail sales accelerated further. In 2010, retail
sales decreased by 4 per cent at constant prices compared to 2009.
In 2010, Estonia’s exports at current prices increased 35 per cent and imports 27 per cent
compared to 2009. This recovery was based on the increased competitiveness of the industrial
sector due to the reduction of wages and companies focus on international clients. Real export
growth is expected to be 6.4 per cent in 2011 and 6.9 per cent in 2012 respectively.
In Q4 2010, the average monthly gross wage was 814 Euro - a 3.9 per cent year-on-year
increase. Average gross monthly wage is expected to grow moderately in 2011 as the wage fund
recovers more slowly than nominal economic growth.
The Estonian labour market started to experience dramatic changes in 2009 when the
unemployment rate soared to 13.7 per cent, up from 5.5 per cent in 2008. In the Q4 2010, for the
first time during the last one and a half years unemployed persons numbered less than 100,000
and the unemployment rate decreased slightly, to approximately 13.6 per cent from an average
unemployment rate of 16.9 per cent in 2010. Long-term unemployment continues to be one the
main problems in Estonia. The lack of skilled workers in growing sectors (structural
unemployment) will hamper the creation of new jobs.
CONTACT: AVO RÕÕMUSSAAR - a.roomussaar@colliers.ee
Colliers International | p. 52