Summaries
Estonia
Estonia´s economic situation improved considerably in 2000. The (slight) recession in
1999 was overcome quickly and now the economy is experiencing a strong upturn.
There was a marked impetus from foreign trade and the domestic demand was further
supported by stronger private consumption. However, in spite of an upward trend in
overall development, the labour market has remained weak. The macroeconomic policy,
which was aimed at stability, decreased the budget deficit, limited the negative current
account balance and prevented a rise in inflation. As a result foreign debt (in USD) went
down. Estonia´s example supports the theory of a positive correlation and mutual de-
pendence between economic growth and the level of integration. Foreign trade and di-
rect investments have been fundamental to growth.
Following a clearly weaker economic expansion world-wide, the rate of growth is ex-
pected to slow down in the course of the year. However, in the medium term, total eco-
nomic production is likely to remain pointing up. The upward trend in price develop-
ment should increase slightly.
Negotiations with the European Union are still faring well, just as the structural reforms
and the privatisation of the few remaining state enterprises. Last steps in the reform
provisions for pension have finally been initiated and a reorganisation of local authority
districts will commence in mid 2001. Moreover, the confidence within the Currency-
Board remains unbroken, and the banking system has been strengthened. The financial
rating list of December 2000 issued by Standard & Poofs, and the Instituional Investors
list of March 2001, are assessing Estonia’s rating more favourably than in their last
years analysis.
Latvia
The Latvian economy, which had returned to the growth path in the mid of 1999
achieved a considerable growth in the year 2000, the highest in the Baltic Area. In addi-
tion, the prognoses for the Latvian economy, in the face of a slowing down of the world
economy, are quite respectable. In order to protect its continuous growth, the west-