The number of unemployed in Tallinn to grow fast

Siim Sarapuu, head of Tallinn and Harjumaa department in Estonian Labour Market Board told TV3 that the number of unemployed people in Tallinn will grow fast in the near time, Postimees.ee reports.

“We get announcements of future layoffs and it shows that the end of this year and beginning of next year is certainly the time when the number of unemployed will grow fast,” Sarapuu said.

He added that the number of unemployment will go back to 2004, when Tallinn had 12,000 registered unemployed.

“Currently the number if near 9000 and we’re prepared for serving up to 12,000 unemployed,” Sarapuu noted.

In November 6084 people registered themselves as unemployed all over Estonia.

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Estonian economy is as a pyramid scheme

Kattel writes in Eesti Paevaleht that it is now clear that the liberal economy and economic policy to attract foreign direct investments that has characterized the Estonian economy for the last 15 years was a short-term success.

"In the next five to ten years we will understand that this success has been a pyramid scheme," Kattel wrote adding that "the worst today when the Estonian economy is shrinking, unemployment has doubled in a year, and public sector continues to spend, is that Estonia's leaders are incapable of analyzing the situation, learn from past mistakes and plan realistic changes."

The main problem contemplated by Estonian ruling politicians is whether to accept the blame for the current crisis or keep blaming the worldwide financial crisis?

"Politically, the right answer, of course, is to blame the world crisis. The problem is that the neo-liberalism, that has dominated the Estonian economy for the last fifteen years, has also been feeding the world financial community that believes in the self-regulating power of markets and wants to keep the government role at a minimum," the professor said

According to Kattel, the Estonian economy was booming when there were plenty of foreign investors and lenders. When they turned their back on Estonia, the country's economy plummeted, reducing the value of investments and fuelling further fall. Investments in productivity, human resources and technology were insufficient; therefore, the country's economy cannot return to growth promptly for the reason that it would require new investors and lenders, who "are not coming".

"Estonians need to understand two simple things: first, the current economic policy model has collapsed and, secondly, the fuel for earlier economic growth has run out and will not be filled any time soon," the expert pointed out.

Kattel stated that three key groups are debating about macroeconomic activities to be performed currently, in times of the crisis. Some people tend to blame external factors telling everybody that as soon as the world financial crisis is over, things will be back to normal, and Estonian state does not have to change the current economic model. At the some time, opinion leaders claim that Estonia needs new objectives and fresh leaders. They say that after joining the EU and NATO and being forced to postpone euro entry, the government has lost its vision to take the nation forward. The third group is represented by the Reform Party that wants to make the current neo-liberal economic policy even more radical as shown in new strategic economic plan put forward by the party recently. For instance, they suggest to make the labour market more flexible although it is already extremely flexible as shown by the rapid growth in unemployment and wage growth slowdown. Labour market must not become more flexible, rather more active in terms of retraining and in-job training.

Unfortunately, neither of the three scenarios would help Estonia overcome the current crisis. Moreover, all three see eurozone as the saviour, although the euro is a means that will simply replace the currency risk such as devaluation with credit risk.

"I believe that economic policy debate in Estonia is impossible since we are incompetent, arrogant or intolerant. Think about how we reacted six months ago on warnings, made by foreign analysts, that Estonian economy is facing a crisis. The only way out of this mess is to say goodbye to neoliberalism and find realistic ways to put the Estonian economy back on track for growth," Kattel concluded.

Source http://baltic-course.com/eng/analytics/

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IMF says Estonia does not need loan

The most important aim at present is to achieve economies in budgetary expenditures,' said Franciszek Rozwadowski, head of the IMF group which visited Estonia, at a press conference at the end of his trip. The most important aim at present is to achieve economies in budgetary expenditures,' he said. There are no immediate liquidity threats, but the fiscal deficit is unsustainable over the longer term,' he said.

I expect them to go on for two to three years without the need to resort to external financing.' The IMF forecasts the Estonian national budget deficit to surpass 3 per cent of gross domestic product in 2009. At the same time, the current recession should give way to a return to economic growth by 2010, the agency reported. At the same press conference, the Estonian central bank released its own assessment of the current state of the national economy, which tallied with the IMF view.

In the case of possible negative developments, Estonia's 2009 fiscal deficit may turn out to be larger than 3 per cent of GDP,' it said, adding that the government should be prepared for a further fiscal cuts in order to meet the Maastricht criteria for euro adoption. Last week the Estonian government approved its 2009 budget, which already includes fiscal tightening of 2 billion kroons (165 million dollars).

Estonia has made adoption of the euro a priority, and hopes to switch currencies in 2011. But loan default rates are set to rise next year.

According to the risk scenario of Eesti Pank's autumn forecast, the share of loans overdue by more than 60 days may increase to nearly 5 per cent of the loan portfolio in 2009,' the central bank predicted.

During the press conference, the IMF also drew attention to the strength of the tiny Baltic nation's political framework and state institutions, including the fixed exchange rate by which the Estonian kroon is pegged to the euro. Seoul government lowers forecast for 2009 GDP growth to 3 per cent 2.

Source http://monstersandcritics.com/news/business/news/article_144~

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