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Estonia Country Risk Report Q2 2019

Estonia Country Risk Report Q2 2019

Key View:

Given the stable domestic political situation and the open business environment, we believe that growth outperformance relative to the rest of the eurozone is highly likely over the coming years. Estonia can continue to transition to a higher value added production and services-based growth model.

Estonia will remain among the most structurally stable countries across emerging markets, in part due to its very strong fiscal position. Having fully converged to all major multilateral European institutions, the country will continue to benefit from a robust policy anchor and a high degree of institutional capacity over the long run.

The country's often fractious relationship with neighbouring Russia, undermined by domestic divisions between ethnic Estonian and ethnic Russians, presents the one key risk to stability.

Estonia faces a major demographic problem. Declining fertility rates, increasing life expectancies and continuous and extensive emigration have led to an aging and shrinking population. In the long run this will create a host of economic, political and social challenges.

Key Risks

Estonia's demographic problem presents the biggest risk to the country's outlook as it weighs on production capacity and firms's competitiveness on foreign markets. Besides this, the actions of Russia continue to represent the biggest external threat to Estonia.Estonia Country Risk


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Growth In Estonia To Return To More Sustainable Levels
GDP By Expenditure Outlook
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
TABLE: GDP GROWTH FORECASTS
Outlook On External Position
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
TABLE: TOP 5 GOODS IMPORTS IN 2017
TABLE: TOP 5 GOODS EXPORTS IN 2017
Monetary Policy
Sluggish Eurozone Inflation Suggests Slower Pace Of Hikes On The Cards
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES IN 2017
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
EUR: Gradual Strengthening Lies Ahead In 2019
TABLE: EUROZONE CURRENCY FORECAST
Estonia Country Risk Q2 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report is solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.Contents10-Year Forecast
The Estonia Economy To 2028
Trend Growth To Average Lower in 2019-2028
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Centre Party To Emerge With Plurality In Estonia's Parliamentary Election
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Few Risks To Structural Stability
Global Macro Outlook
Volatility Feeding Into Slower Growth
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: ESTONIA – MACROECONOMIC DATA AND FORECASTS

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