Estonia - Future trends



Estonia is a leading candidate for EU membership and hopes that its accession could be finalized as early as 2002, although internal problems in the union may postpone it. Political consensus on EU accession will generate stability throughout the transition from a communist to a free-market economy. Gross domestic product growth may accelerate slightly in 2001 due to domestic demand. Exports will grow in line with international demand but the negative foreign trade balance is not likely to be offset in the first half of the decade. The Estonian economy will become more service-based and financial services will receive more weight. Domestic manufacturing will be dependent on the high-tech sector in Sweden and Finland and is likely to grow. Privatization may be almost completed with the railroad sale in 2001. New foreign direct investments will enter Estonia and the flow will increase when the country joins the European Union. Reform of the finance services sector may lead to a further rise in credit growth. Pension reform will be key in 2001 with the government making its new pension scheme obligatory for all new employees. The living standards of the Estonians will rise gradually after the country's EU accession. Access to the development funds and the expertise of the European Union, once full membership is achieved, will be greatly beneficial for the development of the country's infrastructure, rural regions, education, social services, and virtually all aspects of economic life.

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