Eesti PankBank of Estonia
Effects of the global crisis and euro on Estonia
Ülo Kaasik
Ülo Kaasik Effects of the global crisis on Estonia 2
Eesti PankBank of Estonia
Estonia was hit hard by the crisis – global crisis on top of the domestic correction
Ülo Kaasik Effects of the global crisis on Estonia 3
Eesti PankBank of Estonia
Confidence fell rapidly due to regional problems, recent events have less implication
Ülo Kaasik Effects of the global crisis on Estonia 4
Eesti PankBank of Estonia
Shock on exports have been similar across the region
Ülo Kaasik Effects of the global crisis on Estonia 5
Eesti PankBank of Estonia
Exports have started to grow along with the global recovery
Ülo Kaasik Effects of the global crisis on Estonia 6
Eesti PankBank of Estonia
Still lot of capacity not utilised
Eesti PankBank of Estonia
Sharp reaction in labour market
Ülo Kaasik Effects of the global crisis on Estonia 8
Eesti PankBank of Estonia
Reaction has been sharp in labour market – in terms of employment and wages
Ülo Kaasik Effects of the global crisis on Estonia 9
Eesti PankBank of Estonia
Participation rate has stayed high
Ülo Kaasik Effects of the global crisis on Estonia 10
Eesti PankBank of Estonia
But unemployment is probably structural
Ülo Kaasik Effects of the global crisis on Estonia 11
Eesti PankBank of Estonia
Boom time jobs have vanished
Eesti PankBank of Estonia
Financial sector has survived it well
Ülo Kaasik Effects of the global crisis on Estonia 13
Eesti PankBank of Estonia
Non performing loans have stabilised
Over 60 days overdue loans to total portfolio
0%
2%
4%
6%
8%
10%
12%
14%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
üle 60 p viivises olevate laenude osakaal
2009 sügisprognoos ( põhistsenaarium)
maksimaalne võimalik suhtarv 10% kapitaliadekvaatsuse juures
Ülo Kaasik Effects of the global crisis on Estonia 14
Eesti PankBank of Estonia
Banks behaviour is very cautious
Eesti PankBank of Estonia
Domestic demand is still sluggish and domestic inflation pressures low
Ülo Kaasik Effects of the global crisis on Estonia 16
Eesti PankBank of Estonia
Confidence indicators are improving
-80-60-40-20
020406080
2005 2006 2007 2008 2009 2010
Consumers Manufact Constr Retail trade Services
Ülo Kaasik Effects of the global crisis on Estonia 17
Eesti PankBank of Estonia
We expect gradual improvement in domestic demand
Ülo Kaasik Effects of the global crisis on Estonia 18
Eesti PankBank of Estonia
CAD has reversed, probably cyclical phenomenon
Ülo Kaasik Effects of the global crisis on Estonia 19
Eesti PankBank of Estonia
Inflation development driven by foreign prices
Eesti PankBank of Estonia
Government has reacted sharply
Ülo Kaasik Effects of the global crisis on Estonia 21
Eesti PankBank of Estonia
But still some work to do
Ülo Kaasik Effects of the global crisis on Estonia 22
Eesti PankBank of Estonia
Some conclusions• Economy and policies have reacted quickly to
the crisis. Majority of the adjustment is probely over.
• Many challenges still ahead:
– What are the implications of the debt crisis in Europe
– How to avoid structural unemployment?
– Is financial system supporting the recovery enough?
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