OREANDA-NEWS. January 21, 2010. Better economic developments on Estonia’s most important export markets – primarily in Europe – will help the economy of Estonia to recover as well. We expect economic growth to reach 1.5% this year with the support of export and investments, said Swedbank’s senior analyst Maris Lauri at press conference, reported the press-centre of Swedbank.

Lauri said that improved economic prospects in the world also create more opportunities for growth for Estonia, but there are still many risks that will be threatening the world in the foreseeable future. "Recovery has been somewhat quicker than expected, but we should not expect to see a strong increase in the long-term perspective. There are many growth risks in the mid-term perspective that have to be considered, starting from weak consumer demand and high employment and ending on structural reforms. The risks of inflation and deflation will not disappear and problems in the financial sector may not have been conquered yet. However, it seems that global economy will grow in 2010 and probably also in 2011, even if this growth is considerably more modest than in previous years,” she added.

The economy of Estonia has adapted to the recession remarkably well, but the country needs to move on from cost-cutting to the creation of new opportunities in order to remain successful. "Introducing the Euro in 2011 will make it easier, but both companies and the state will have to work hard to achieve long-term development,” said Maris Lauri. "Export will certainly be one of the keys to growth."

Lauri believes it is important for Estonian companies to continue working on improving their competitive ability in order to increase export. "Even though the changes that occurred last year were more extensive than expected, they are not sufficient for long-term economic development – cost-cutting has restored the competitive ability of Estonian economy, but the pressure to increase costs in the next years is strong due to the price of energy and labour,” she noted.

"Increasing production efficiency and development of products and services in the nearest future is of critical importance. We must look at new markets that used to be less important for us, because no considerable improvements can be expected in some of the countries that used to be important for Estonia," said Maris Lauri.

The first half of 2010 will show whether Estonia will be able to meet the requirements established to the introduction of the Euro and whether the Euro will become the currency of the state in 2011. "We believe that it is very likely. The Euro is not the saviour of economy, but it would make many economic developments considerably easier as it would reduce risks by making investments possible and broadening business contacts. The government will have to continue working on improving the competitive ability of Estonian economy and the budgetary position of the public sector even after the Maastricht criteria have been met," said Lauri.

"Low tax rates and laws that favour companies alone are not sufficient for the creation of a good economic environment; it is also important that a generally good living environment is created for companies and their employees, for the country’s citizens in general," added Lauri.