.jpg) | |
| Currency | Euro (EUR, €) |
|---|---|
| Calendar year | |
Trade organisations | EU,WTO andOECD |
Country group | |
| Statistics | |
| Population |  1 369 285 (1 January 2021)[3] |
| GDP | |
| GDP rank | |
GDP growth |
|
GDP per capita | |
GDP per capita rank | |
GDP by sector |
|
| |
Population belowpoverty line | |
 31.8medium (2023)[8] | |
| |
| 73 out of 100 points (2023)[10] (13th) | |
Labour force | |
Labour force by occupation |
|
| Unemployment | |
Average gross salary | €2,269, monthly (December, 2024) |
| €1,706, monthly (December, 2024) | |
Main industries | engineering, electronics, wood and articles of wood, textiles, information technology, telecommunications |
| External | |
| Exports |  €18.2 billion (2023)[15] |
Export goods | Electrical equipment, agricultural products and food, wood and wooden articles, mineral products, transport equipment |
Main export partners | |
| Imports | €21.2 billion (2023)[15] |
Import goods | Electrical equipment, transport equipment, mineral products, agricultural products and food, mechanical appliances |
Main import partners | |
FDI stock | |
| $809 million (2017 est.)[5] | |
Grossexternal debt |  $19.05 billion (31 December 2016 est.)[5] |
| Public finances | |
| $345 million (31 December 2017 est.)[5] | |
| Revenues | 38.7% of GDP (2019)[16] |
| Expenses | 39.0% of GDP (2019)[16] |
| Economic aid |
|
| |
All values, unless otherwise stated, are inUS dollars. | |
Theeconomy of Estonia is ratedadvanced by theWorld Bank, i.e. with highquality of life and advanced infrastructure relative to less industrialized nations.Estonia is a member of theEuropean Union, theeurozone, and theOECD.[20] The economy is heavily influenced by developments in theFinnish andSwedish economies.[21]
After Estoniarestored its independence in 1991 and became amarket economy, it emerged as a pioneer in the global economy. Estonia styled itself as a bridge between East and West, adopting significant economic reforms and technological innovations. In 1992, the country adopted theEstonian kroon as its currency, this stabilised the economy. In 1994, it became the first country in the world to adopt aflat tax, with a rate of 26% regardless of personal income. Estonia received more foreign investment, per person, in the late 1990s than any other country in Central and Eastern Europe. The country has been catching-up with theEU-15 - the richer European countries. Its GDP per capita grew from 35% of the EU-15 average in 1996 to 65% in 2007, similar to Central European countries.[22]Income per person was $49,000 in 2023 according to theIMF; this was betweenPoland andPortugal, but belowSpain.[23]
For Estonia, the2008 financial crisis was easier to weather, because its budget has consistently been kept balanced, and this meant public debt relative to GDP remained the lowest in Europe. The economy recovered in 2010.[24] In January 2011, Estonia adopted theeuro, joining theeurozone.[25] Estonia has demonstrated resilience, with a strong service sector, particularly in IT due to theTiigrihüpe project, and advanced e-government services. Estonia's commitment to acircular economy, innovation and its success in maintaining a balanced budget, low public debt, and a competitive tax system have positioned it as a model of economic reform and growth in post-Soviet Europe.
In the decades prior toWorld War I and independence, during the Czarist rule a rather large industrial sector developed in Estonia. For example, theKreenholm Manufacturing Company was then the world's largestcotton mill.
After declaring independence in 1918, theEstonian War of Independence and the subsequent signing of theTreaty of Tartu in 1920, the new Estonian state inherited a ruined post-war economy and an inflated ruble currency. Despite considerable hardship, dislocation, and unemployment, Estonia spent the first decade of independence entirely transforming its economy. In 1918, The Czarist ruble was replaced by theEstonian mark, which was in circulation until 1927. By 1929, a stable currency, thekroon, had been established. It was issued by theBank of Estonia, the country'scentral bank. Compensating the German landowners for their holdings, the government confiscated the estates and divided them into small farms, which subsequently formed the basis of Estonian prosperity. Trade focused on the local market and the West, particularly Germany and the United Kingdom. Only 3% of all commerce was with the USSR.
Historically, Estonia's economy was agricultural, modernising significantlypost-independence from Russia in 1918. There was a notable knowledge sector inTartu and expanding industrial sector, exemplified by theKreenholm Manufacturing Company.Western European markets were familiar with Estonian dairy, with the main trade partners being Germany and the UK; only 3% of commerce was with the neighbouringUSSR. Estonia andFinland had a similar standard of living.[26] USSR's annexation of Estonia in 1940 and destruction during World War II crippled the economy. Post-warSovietization continued, with the integration of Estonia's economy into the USSR'scentrally-planned structure.
The USSR's forcible annexation of Estonia in 1940 and the ensuingNazi andSoviet destruction duringWorld War II crippled the Estonian economy. Post-war Soviet occupation and Sovietisation of life continued with the integration of Estonia's economy and industry into the USSR's centrally planned structure. More than 56% of Estonian farms werecollectivised in the month of April 1949 alone aftermass deportations to Siberia the previous month. Moscow expanded on those Estonian industries which had locally available raw materials, such asoil shale mining and phosphorites.
After Estoniarestored its independence in 1991 and became amarket economy, it emerged as a pioneer in the global economy. Estonia styled itself as a bridge between East and West, adopting significant economic reforms and technological innovations.
In June 1992, Estonia replaced theruble with its own freely convertible currency, thekroon. Acurrency board was created and the new currency was pegged to the German Mark at the rate of 8 Estonian kroons perDeutsche Mark. When Germany introduced theeuro the peg was changed to 15.6 kroons per euro.
In 1994, it became the first country in the world to adopt aflat tax, with a rate of 26% regardless of personal income.[27] Between 2005 and 2008, this was reduced to 21% over several steps.[22]
In early 1992, both liquidity problems and structural weakness stemming from the communist era precipitated a banking crisis. As a result, effective bankruptcy legislation was enacted and privately owned; well-managed banks emerged as market leaders.[28] The fully electronicTallinn Stock Exchange opened in early 1996, and was purchased by Finland'sHelsinki Stock Exchange in 2001. Estonia joined the World Trade Organization in 1999.
From the early 2000s to the latter part of that decade, the economy experienced considerable growth. In 2000, Estonian GDP grew by 6.4%. After accession to theEuropean Union in 2004, double-digit growth was soon observed. GDP grew by 8% in 2007 alone. Increases in labor costs, the imposition of tax on tobacco, alcohol, electricity, fuel, gas, and other external pressures (growing prices of oil and food on the global market) inflated prices in 2009.[29]
The2008 financial crisis had a deep effect on the economy, primarily as a result of an investment and consumption slump, that followed the burst of the real estate market bubble that had been building up. In December 2008, Estonia became a donor country to theIMF-led rescue package forLatvia. In response to the crisis, theAnsip government opted for fiscal consolidation and retrenchment by maintaining fiscal discipline and a balanced budget in combination with austerity packages: The government increased taxes, and reduced public spending by slashing expenditures and public salaries across the board.[24]
After a long period of very high growth of GDP, the GDP of Estonia decreased. In the first quarter 2008, GDP grew only 0.1%, and then decreased: negative growth was −1.4% in the 2nd quarter, a little over −3% (on a year-to-year basis) in the 3rd quarter, and −9.4% in the 4th quarter of that year.[30]
The government made a supplementary negative budget, which was passed by theRiigikogu. The revenue of the budget was decreased for 2008 by EEK 6.1 billion and the expenditure by EEK 3.2 billion.[31] A current account-deficit was extant, but began to shrink in late 2008. In 2009, the economy further contracted by 15% in the first quarter.[30] Low domestic and foreign demand depressed the economy's overall output.[32] The economy's 34% industrial production drop was the sharpest decrease in industrial production in theEuropean Union.[33] Estonia was one of the five worst-performing economies in the world in terms of annual growth,[34] and had one of the hightest rates of unemployment in the EU, which rose from 4% in May 2008 to 16% in May 2009.[35]
In July 2009, thevalue-added tax was increased from 18% to 20%.[36] The recorded budget deficit for 2009 was just 1.7% of GDP.[24] The result was, that Estonia was one of only five EU countries in 2009 that met the Maastricht criteria for debt and deficit, and had the third-lowest deficit after Luxembourg and Sweden; Estonia did not ask for support from theIMF. Despite the third-largest drop in GDP, the country had the lowest budget deficit and lowest public debt among Central and Eastern European countries. In 2009, the Estonian economy began to rebound, and economic growth resumed in the second half of 2010. The country's unemployment rate dropped significantly to pre-recession levels.[37] To top it off, Estonia was granted permission in 2010 to join the eurozone in 2011.[24]
Before joining the eurozone, theEstonian kroon had been pegged to the euro at a rate of 15.64664 EEK to one euro; before then, the kroon was pegged to the German mark at approximately 8 EEK to 1 DEM.
The design ofEstonian euro coins was finalized in late 2004.[38] Estonia's journey towards the euro took longer than originally projected, owing to the inflation rate continually being above the required 3% before 2010,[39] which prevented the country from fulfilling the entry criteria. The country originally planned to adopt the euro on 1 January 2007 and officially changed its target date twice: first to 1 January 2008, and later to 1 January 2011.[25]
On 12 May 2010, the European Commission announced that Estonia had met all criteria to join the eurozone.[40] On 8 June 2010, EU finance ministers.[41] In July 2010, Estonia received the final approval from ECOFIN to adopt the euro onwards from 1 January 2011; on that date Estonia became the 17theurozone member state and circulated alongside thekroon until 14 January 2011.[42] With that, Estonia became one of the first post-Soviet states to join theeurozone.[25]
In August 2011,Standard & Poor's raised Estonia's credit rating from A toAA-. Among various factors, S&P cited as contributing to its decision was confidence in Estonia's ability to "sustain strong economic growth."[43] Estonia's GDP growth rate in 2011 was above 8%, despite having negative population growth.[44][45]
The Estonian economy was hit by theCOVID-19 recession before bouncing back with an 8.6% rise in GDP in 2021,[46] this was followed by the economic effect of theRussian invasion of Ukraine in February 2022 resulting in a fall in GDP of 1.3% in 2022 and high inflation which hit 24%[47] before falling to single digits in 2023.
"Since reestablishing independence, Estonia has styled itself as the gateway between East and West and pursued economic reform and integration with the West."[48] Estonia's market reforms put it among the economic leaders in the formerCOMECON area.[citation needed] A balanced budget, almost non-existentpublic debt, flat-rateincome tax,free trade regime, adoption of theeuro, competitive commercial banking sector, hospitable environment for foreign investment, innovativee-Services and mobile-based services are hallmarks of Estonia's free-market-based economy.[citation needed]
Theprivatisation of state-owned firms is virtually complete, with only the port and main power plants remaining in government hands.[citation needed] The constitution requires a balanced budget,[49] and the protection afforded by Estonia's intellectual property laws is similar to that of the EU.[50][51][52] Near-ideal conditions for the banking sector exist. Foreigners are not restricted from buying bank shares or acquiring majority holdings.[citation needed]
In 2013, the average monthly gross wage in Estonia was €980 (US$1,330).[53] This figure has grown consistently to €2,065 (US$2,217) as of December 2023.[54]
Estonia offers unique tax conditions for businesses, where the tax on undistributed profits is 0%. This allows companies that reinvest their profits into development to avoid tax obligations and allocate more funds for growth and expansion.[55] In 2024, Estonia holds the first place in theInternational Tax Competitiveness Index and on a permanent basis is taking top positions in theEconomic Freedom Index (8th place) and in theEase of Doing Business Index (18th place).[56]
In 2011, according to projections made byCEPII[57] by 2050, Estonia could become the most productive country in the EU, after Luxembourg, and so join the top five most productive nations in the world.[58]
According to theMinistry of Environment, Estonia committed to developing acircular economy strategic document and action plan by 2021.[59][60] In March 2020, the Estonian Circular Economy Industries Association, specified that Estonia should consider the newEuropean Green Deal and principles of circular economy when making investments to recover the economy after Covid.[61]
Estonia has around 600,000 employees, yet the country has a shortage of skilled labor, and since skill shortages are experienced everywhere in Europe, the government has increased working visa quota for non-EEA citizens, although it has nevertheless been criticized for being inadequate for addressing the shortages.
Thelate-2000s recession in the world, the near-concurrent local property bust with changes in Estonian legislation to increaselabour market flexibility (making it easier for companies to lay off workers) saw Estonia's unemployment rate shoot up to 18.8% throughout the duration of the crisis, then stabilise to 13.8% by summer 2011, as the economy recovered on the basis of strong exports. Internal consumption, and therefore imports, plummeted; and cuts were made in public finances.[62] Some of the reduction in unemployment has been attributed to some Estonians' emigrating for employment to Finland, the UK, Australia, and elsewhere.[63]
After the recession, the unemployment rate went lower, and throughout 2015 and 2016, the rate stayed near the levels that preceded the economic downturn, staying at just above 6%.[64] In 2020-2023 the unemployment rate moved around between 5.2% and 7.7%.[65]
Tallinn has emerged as the country's financial center. According to Invest in Estonia, advantages of Estonian financial sector are unbureaucratic cooperation between companies and authorities, and relative abundance of educated people although young educated Estonians tend to emigrate to western Europe for greater income. The largest banks areSwedbank,SEB Pank, andNordea. Several IPOs have been made recently on theTallinn Stock Exchange, a memberOMX system.
The Estonian service sector employs over 60% of workforce. Estonia has a strong information technology (IT) sector, partly due to theTiigrihüpe project undertaken in mid-1990s, and has been mentioned as the most "wired" and advanced country in Europe in the terms ofe-government.[66][67]
Farming, which had been forciblycollectivized for decades until the transition era of 1990–1992, has become privatized and more efficient, and the total farming area has increased in the period following Estonia's restoration of independence.[68] The share of agriculture in the gross domestic product decreased from 15% to 3.3% during 1991–2000, while employment in agriculture decreased from 15% to 5.2%.[69]
Themining industry makes up 1% of the GDP. Mined commodities include oil shale,peat, and industrial minerals, such asclays,limestone,sand andgravel.[70] Soviets created badly polluting industry in the early 1950s, concentrated in the north-east of the country. Socialist economy and military areas left the country highly polluted, and mainly because ofoil shale industry inIda-Virumaa,sulfur dioxide emissions per person are almost as high as in the Czech Republic. The coastal seawater is polluted in certain locations, mainly the east. The government is looking for ways to reduce pollution further.[71] In 2000, the emissions were 80% smaller than in 1980, and the amount of unpurified wastewater discharged to water bodies was 95% smaller than in 1980.[72]
Estonian productivity is experiencing rapid growth, and consequently wages are also rising quickly, with a rise in private consumption of about 8% in 2005. According to Estonian Institute of Economic Research, the largest contributors to GDP growth in 2005 were processing industry, financial intermediation, retailing and wholesale trade, transport and communications.[73]
Estonia produced in 2018:
In addition to smaller productions of other agricultural products.[74]
Largest companies by revenue[edit]
| Largest companies by profit[edit]
|
In 2022, the sector with the highest number of companies registered in Estonia is Services with 144,514 companies followed by Finance, Insurance, and Real Estate and Retail Trade with 47,001 and 26,635 companies respectively.[76]
Railway transport dominates the cargo sector, comprising 70% of all carried goods, domestic and international. Road transport is the one that prevails in the passenger sector, accounting for over 90% of all transported passengers. 5 major cargo ports offer easy navigational access, deep waters, and good ice conditions. There are 12 airports and 1heliport in Estonia.Lennart Meri Tallinn Airport is the largest airport in Estonia, with 1,73 million passengers and 22,764 tons of cargo (annual cargo growth 119.7%) in 2007. International flight companies such asSAS,Finnair,Lufthansa,EasyJet, andNordic Aviation Group provide direct flights to 27 destinations.[77]
Approximately 7.5% of the country'sworkforce is employed in transportation and the sector contributes over 10% of GDP. Estonia is getting much business from traffic between European Union and Russia, especially oil cargo through Estonian ports. Transit trade's share of GDP is disputed, but many agree that Russia's increased hostility is decreasing the share.[78][79]
Instead of coal, electricity is generated by burning oil shale, withlargest stations in Narva. Oil shale supplies around 70% of the country's primary energy. Other energy sources are natural gas imported from Russia, wood,motor fuels, andfuel oils.[80]
Wind power in Estonia amounts to 58.1 megawatts, whilst roughly 399 megawatts worth of projects are currently being developed. Estonian energy liberalization is lagging far behind theNordic energy market. During the accession negotiations with the EU, Estonia agreed that at least 35% of the market are opened before 2009 and all of non-household market, which totals around 77% of consumption, before 2013. Estonia is concerned that Russia could use energy markets to bully it.[81] In 2009, the government considered granting permits to nuclear power companies, and there were plans for a shared nuclear facility with Latvia and Lithuania.[82] Those plans were shelved after theFukushima Daiichi nuclear disaster in March 2011.
Estonia has high Internet penetration, and connections are available throughout most of the country.
| Country | Export | Import |
|---|---|---|
 Finland | 17% | 15% |
 Latvia | 12% | 11% |
 Sweden | 9% | 8% |
 Lithuania | 8% | 10% |
 Germany | 7% | 12% |
 Netherlands | 4% | 6% |
Estonia exports electrical equipment (14% of all exports annually), wood and wooden articles (11% of all exports annually), food and agricultural products (11% of all exports annually), mineral products (10% of all exports annually), and transport equipment (10% of all exports annually). Estonia imports electrical and transport equipment (26% of all imports annually, 13% each), mineral products (12% of all imports annually), food and agricultural products (11% of all imports annually), machinery and mechanical appliances (10% of all imports annually).[83]
| Resource | Location | Reserves |
|---|---|---|
| Oil shale | north-east | 1,137,700,000 mln t |
| Sea mud (medical) | south | 1,356,400,000 mln t |
| Construction sand | across the country | 166,700,000 mln m3 |
| Construction gravel | north | 32,800,000 mln m3 |
| Lake mud (medical) | across the country | 1,133,300 mln t |
| Lake mud (fertilizer) | east | 170,900 t |
| Ceramic clay | across the country | 10,600,000 mln m3 |
| Ceramsid clay (for gravel) | across the country | 2,600,000 mln m3 |
| Technological dolomite | west | 16,600,000 mln m3 |
| Technological limestone | north | 13,800,000 mln m3 |
| Decoration dolomite | west | 2,900,000 mln m3 |
| Construction dolomite | west | 32,900,000 mln m3 |
| Blue clay | across the country | 2,044,000 mln t |
| Granite | across the country | 1,245,100,000 mln m3 |
| Peat | across the country | 230,300,000 mln t |
| Construction limestone | north | 110,300,000 mln m3 |
| Limestone cement | north | 9,400,000 mln m3 |
| Clay cement | north | 15,6000,000 mln m3 |
| Graptolitic argillite[84] | north | 64,000,000,000 mln t |
| Wood | across the country | 15,6000,000 mln m3 |
| Technological sand | north | 3,300,000 mln m3 |
| Lake lime | north and south | 808,000 t |
| Phosphorite | north | over 350,000,000 mln t (estimated) |
| Subsoil | across the country | 21,1 km3 |
The following table shows the main economic indicators in 1993–2018.[85]
| Year | GDP (in Bil. US$ PPP) | GDP per capita (in US$ PPP) | GDP (in Bil. US$ nominal) | GDP growth (real) | Inflation rate (in Percent) | Unemployment (in Percent) | Government debt (in % of GDP) |
|---|---|---|---|---|---|---|---|
| 1993 | 11.2 | 7,338 | 1.8 | n/a | | 6.5% | n/a |
| 1994 | 11.3 | | 2.5 | | | | n/a |
| 1995 | 11.7 | 8,022 | 3.9 | 2.2% | 29.0% | 9.6% | 9% |
| 1996 | 12.5 | | 4.8 | | | | |
| 1997 | 14.4 | | 5.2 | | | | |
| 1998 | 15.2 | | 5.6 | | | | |
| 1999 | 15.3 | | 5.7 | | | | |
| 2000 | 17.3 | 12,113 | 5.7 | 10.6% | 3.9% | 14.6% | 5% |
| 2001 | 18.8 | | 6.3 | | | | |
| 2002 | 20.3 | | 7.4 | | | | |
| 2003 | 22.3 | | 9.9 | | | | |
| 2004 | 24.5 | | 12.2 | | | | |
| 2005 | 27.7 | 19,765 | 14.1 | 9.4% | 4.1% | 8.0% |  5% |
| 2006 | 31.3 | 22,600 | 17.1 | 10.3% | 4.4% | 5.9% | 4% |
| 2007 | 34.6 | 25,144 | 22.5 | 7.7% | 6.7% | 4.6% | 4% |
| 2008 | 33.4 | 24,328 | 24.4 | −5.4% | 10.6% | 5.5% | 4% |
| 2009 | 28.7 | 20,946 | 19.7 | −14.7% | 0.2% | 13.5% | 7% |
| 2010 | 29.8 | 21,721 | 19.6 | 2.3% | 2.7% | 16.7% | 7% |
| 2011 | 32.6 | 23,919 | 23.2 | 7.6% | 5.1% | 13.2% | 6% |
| 2012 | 34.4 | 25,494 | 23.0 | 4.3% | 4.2% | 10.0% | 10% |
| 2013 | 36.2 | 26,508 | 25.1 | 1.9% | 3.2% | 8.6% | 10% |
| 2014 | 38.1 | 27,856 | 26.6 | 2.9% | 0.5% | 7.4% | 11% |
| 2015 | 38.4 | 28,685 | 22.9 | 1.7% | 0.1% | 6.2% | 10% |
| 2016 | 41.2 | 29,684 | 24.1 | 2.1% | 0.9% | 6.8% | 9% |
| 2017 | 44.7 | 31,750 | 26.9 | 4.9% | 3.7% | 5.8% | 9% |
| 2018 | 47.5 | | 30.6 | | | | |
| 2019 | 50.3 | 31.3 |
Gross domestic product per capita by county.[86]
| GDP per capita, euros | |
|---|---|
| County | 2023 |
| Whole country | 27,868.5 |
| Harju county | 36,709.5 |
| ..Tallinn | 41,916.7 |
| Hiiu county | 18,034.7 |
| Ida-Viru county | 19,678.1 |
| Jõgeva county | 16,973.3 |
| Järva county | 19,483.0 |
| Lääne county | 16,022.8 |
| Lääne-Viru county | 18,277.6 |
| Põlva county | 14,623.7 |
| Pärnu county | 18,889.2 |
| Rapla county | 15,946.1 |
| Saare county | 17,084.9 |
| Tartu county | 27,021.8 |
| ..Tartu city | 32,183.3 |
| Valga county | 14,592.1 |
| Viljandi county | 19,320.5 |
| Võru county | 16,664.2 |
{{cite web}}: CS1 maint: archived copy as title (link){{cite web}}: CS1 maint: archived copy as title (link)Estonia's credit rating was raised by Standard & Poor's Ratings to the second-highest level in eastern Europe on the Baltic country's strong economic growth and solid public finances.
Member states of theEuropean Union | ||
|---|---|---|
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See also:Potential enlargement andFormer members | ||
