A rare bit of good news from a euro-zone economy

Why do people continually complain about articles on this site, but then return again and again to read from it? It really highlights either their intelligence level or their persecution complex.

There is not a single country on this planet that doesn't have problems. NOT ONE. China, India, Brazil, Australia etc.

So why does it stick in your craw when someone highlights some of the good or success in one country?

Why is it that hard to read a good story about an EU member when 90% of all news stories on the EU are focussing on Greece and Italy sliding into a debt abyss?

Estonia is a tiny country that makes up only 0.3% of the EU population and competes in a world where 150 countries are bigger than it. It has created an economic model that doesn't work for everyone but takes into account its tiny size and the fact that the country next door that is 110 times larger in population has already wiped it off the map for half a century.

It seems to me (someone not from Europe) that Estonia made the hard decisions and is now reaping the results of them. It's a pity that countries like Greece, Italy, Portugal and Spain didn't do the same thing until they were almost forced to by outside influences.

There's not a single former-USSR country that has a higher GDP per capita (PPP) than Estonia and there's not a single EU member that has a lower government debt than Estonia.

So for a small country squished among larger ones it has done bloody well. If only the Greek, Italian and even American politicans would learn some of the same lessons.

Oh and ToivoE

Perhaps you should try to stimulate your mind a bit and look up and argue the points instead of just nitpicking.

" 'It scores well in business-friendliness'
how to measure it? by ranking? where is EST in this ranking compared to US or nordic?"

This is a World Bank measure and Estonia ranks 14th. And while it is behind the US and all the Nordic countries, it is still ahead of 21 other EU members and all former-USSR states except Georgia.
http://data.worldbank.org/indicator/IC.BUS.EASE.XQ?order=wbapi_data_valu...

"unempoyment is 14%, how does it compare with other countries?"
It's current rate is 21st in the EU, but its previous rate would have put it at 26th. So of course it is high, but is at least improving. To have dropped the rate by 5% (or a 27% decrease) is an amazing effort by a small trade exposed economy.

Get out and have a look how bad some other economies have got it and then try to criticise the improvement.

@JanToldsepp

Well.. I don't see any more misery in the streets than I would have before. (You know... emotionless, always miserable Estonians :P )
I only know one lady who lost her job during this recession. Some people had their salary cut, not not by a marginal amount. We all still travel as much as before. To be honest, some of my friends travel more than they did before. We do things like we always have.
And as a young woman, I can say, I have not cut back on my shopping. :)
I don't see more beggars on the streets (if you don't look at the 4-5 gypsies who have appeared on our streets this spring, summer - thanks to Finland).

When I was looking for a job last year (when Estonia was in deep, deep recession) I found three, so I even got to choose.
You said you weren't Estonian.. well, maybe that's why it seems so horrible for you. We, Estonians, just get on with our lives. And if you look hard enough you will find a job. And if not... it's like my mother always says.. if there is no way out, there is always a way out.

When I walk on the streets, I see calm people, the young ones smile and have a good time, the older ones are a bit more reserved. Life really isn't THAT bad. I'm sure there are people who might have been hit hard by it, but you know... as I said life still goes on. I really don't think we're walking like dead zombies on the street.

Jan Toldsepp,

Please note that this much publicised 15-20% GDP drop was indeed welcome, because Estonian GDP in 2004-2008 was a huge bubble. Economy simply went back to where it should have been in the first place. Same with Latvia and Lithuania.

Today, Estonia is taking maximum advantage of the free spending elsewhere and pays back its debt amassed during boom time. Estonian private sector leverage has fallen by HALF since peaking in 2008. If things continue the same way, then private sector savings will exceed outstanding liabilities in 2014. This makes hard recessions pretty much impossible in the future - one cannot go bankrupt without debt after all.
The other remarkable statistic is that in the previous boom, it took 5 euros of external debt to create 1 euro in GDP growth. Today, 1 euro in GDP growth pays back 2 euros in foreign debt. And nominal GDP growth is still at 16% or so.

My suspicion is that most of Western world will have to take the same path as the Baltics already did and I believe it was still relatively painless here. 5 years of boom could not make people forget about the frugal ways they needed to live for decades before. After 30-40 years of boom, I'm not so sure.

to ToivoE

Remember that you are just a visitor here and you are not in the position to tell The Economist "to change its general policy".

Your style of writing and your logic is no match to "The Economist". Article is based on real figures. Please take another look.

It was really funny to read that you would like to compare Estonia with a superpower (USA) ;)

What is wrong with you? Where did you get all this angst?

Things are not perfect in Estonia, but outlook here is not that bad, I dare say ..

The style betrays that the author of this article is Edward Lucas.
I am still waiting for the day when The Economist will publish an article about the social cost of the past crisis in the Baltic states.

Dear Sir

You should consider a career as cheesy PR writer, not as a journalist.

TheEconomist needs to change its general policy. Just publish the name of the person who has written the story. The chief editor + team members in case of collaborative team work.

This story contains lots of prediction and unsubstantiated cheesy opinions for a short story. Dear old TheEconomist. It would be nice to check the predictions of your writers in a year or two. what was the error margin? was it correct at all? "... on the inside track for new German-centred “super-euro”" you say?

* "It scores well in business-friendliness"
how to measure it? by ranking? where is EST in this ranking compared to US or nordic?

* yes, unempoyment is 14%, how does it compare with other countries?

etc.

Dear Estonian friends,

Things are also well in Italy. Do not believe everything you read. The shenanigans of this week were mostly provoked by our own banks. This is being described as "the markets sending a shot across the bow to Italy". In reality our own banks were sending a shot across the bow to Silvio Berlusconi. The problem is that his popularity has sunk to levels where he is completely paralysed, after losing 4 referenda by 95% to 5% last month (as a friend in Slovenia remarked to me, "Jeez, even our referendum on independence was approved by only 88% of the people") - but, general elections are still 2 years away, and nobody, not Italians, not Europeans and not the international economy can afford to wait for Silvio to leave power so late.
So to get rid of him our own banks are threatening to take down the entire "system". It will not happen. The euro is fine, it still trades at USD 1.40, exports are fine, tourism is fine here, the seaside is lovely and filled with people, etc.
On the other hand, cinemas, discotheques, music shops and many restaurants are completely empty, as people have cut back on non-essential spending - but I think the Baltic peoples know this dynamic.

@ Tallinner:

Did I say I only wanted to read bad news? I would like it to be more balanced. I also want to read to stories about the daily lives of Estonia's longterm unemployed who have to live from 75euros a month. I am not Estonian but have family connections and visit it often. I see more misery on the street and in my family everytime I came there since end 2008. Maybe things would finally start improving again. About the Human development index. I don't understand how countries like the Baltics whose GDP dropped about 15-20% in one year improve their ranking. Isn't this because some other countries did even more bad (not in falling GDP, but social policy, inflation,...)?

Things are well in Estonia

to Jan Toldsepp

Suppose the author is indeed EL.

So .. don't you like EL? Why?

And do you expect him to post bad news only?

The social cost of the last crisis (we called it "masu") was not that bad in Estonia. At least by checking the Human Development Index or by Health Index http://hdr.undp.org/en/data/trends/

To all here and the author,

I'll tell you a story. For many years there was a foreign Estonian, Priit Vesilind, working as a journalist for National Geographic. He visited Estonia half incognito in 1980 and then wrote a 30-page article about that in NGM. (http://cgi.ebay.com/National-Geographic-4-1980-Tx-Estonia-Oursi-Village-...)

Anyway, on his last day in Tallinn, he interviewed a random guy in the old town and told him that he had heard that Estonia was the best corner to live in in the Soviet Union. The guy answered: "what? We have nothing here! What life are you talking about? Look at Sweden, or norway or Denmark! Here is nothing!"

This mentality is perfectly valid still 30 years later, the point is that Estonians will never start comparing themselves to Ukraine, Armenia, Uzbekistan or even Latvia. They compare themselves to a 300-year-old demorcacy and complain.

Life in Estonia is better than in any point of a last 1000-year history and it is improving fast. High unemploymency? Poor people? Weak social system? I'd say so far it is going as planned - in 2008 and 2009, Estonian PM repeatedly said that the way out of crisis is to cut budget and not borrow, stimulate economy so that exports and eventually domestic consumption would become the drivers and then allowing to imporve on the "soft" sectors - when Estonia was cutting budget, the others were borrowing - can you imagine what would have happened if Estonia at the time had started borrowing too??

In 1 month Estonia will celebrate its 20th jubilee of restauration of the Independence, can anybody remember what the country was like back in 1991? What has been done and achieved in 20 years serves as a book-example for any emerging economy.

Thank you, author, for a good and supportive article, it was a very pleasant reading.

I could see the need for anonymity in political or human rights stories but for the business section ... Brutal disclosures of intrests & honesty.

Estonia is a great country which will become more like its Nordic neighbours than the Slavic and Baltic states around it. It will be quietly prosperous.

@dragos27

You are so right. We are v e r y lucky to be next to Finland and Sweden. And it is not only about investments and business know-how that is flowing in. It is also about the soft values and attitudes that society is made of. Our society is drifting towards the same model that is working so well in Finland and Sweden. That drift is slow, right, but it is happening all the time ..

As if it's that hard to succeed next to Finland and Sweden.

Dear Jan Toldsepp,

I am not blind, but I really cannot see much misery when I walk or drive on streets in Tallinn or in countryside. I have visited countries that are wealthier than Estonia and I have visited countries that are poorer than Estonia. And I can see that Estonia is making progress.

Human Development Index is an absolute index. It in not relative index (related to other countries). You can check the methodology (and criticism ;)) from http://en.wikipedia.org/wiki/Human_Development_Index#New_methodology

But .. oh .. yes .. you can find misery in Estonia. I have visited elderly care institutions that are not nice places. And although we have high unemployment here, it is very difficult to find dedicated personnel to take care of the elderly. Not just feed and clean them but to say a kind word. Or just to hold hands.

And we have dire shortage of qualified IT-specialists .. but that is a problem everywhere ;)

By the way, where are you from, Jaan Tõldsepp (as your pen name would be spelled in Estonian)?

How can a foreigner buy shares on the Estonia stock market?

@ ElizabethMarks:

Unemployment has decreased, but there is a large number of longterm unemployed, who have to survive on 75euros a month. I am indeed not Estonian, but would you say that for Estonians it is easy to live like that? Most Estonians maybe were not hurt so badly by the crisis but a minority is, and I have the impression that most Estonians don't care so much about is happening with them. On the other hand, I admire the Estonians who accept necessary budget and wage cuts without much protest. In my country most people are angry and talking about organizing strikes even if wage cuts of only 1% are suggested. So that's one advantage of having been part of the Soviet Union :) .

@dragos 27

Poland is also close to Sweden and Russia shares a border with Finland and Norway and yet neither seems to be adapting their country and culture as much as Estonia......

Hmmm must take more than just location then mate!