Publication: Monitor Volume: 6 Issue: 155

Estonia recorded GDP growth of 5.2 percent in the first quarter of 2000 (, “Main indicators”). Although domestic demand is growing quickly (9 percent), much of the growth can be attributed to growing demand in Western Europe for Estonia’s exports. In the first half of this year, Estonian exports were up 49 percent in kroon terms. In contrast to many CIS countries, this export boom is not due to a recovery in sales to Russia. During January-April 2000, Estonian exports to CIS countries were only 562 million kroons, compared to 725 million kroons in the first four months of 1999. Estonia’s export boom is due instead to growing demand in Western Europe. In the first four months this year, EU countries took 12,161 million kroons worth of Estonian exports, up from 7,697 million kroons in January-April 1999. EU countries now take 78 percent of Estonia’s total exports. Many forecasters anticipate that the economic recovery in the EU will continue to strengthen this year, which bodes well for Estonian growth prospects in 2000.

Estonia is also benefiting from its liberal regulation of foreign trade. In a recent study from California’s Milken Institute (, March 2000), Estonia placed fourth out of eighty-seven countries in terms of trade openness: Foreign trade turnover accounted for 159 percent of Estonian GDP in 1998, compared to 59 percent in Finland and 19 percent in the United States. As a small, open country this is not unusual the first three countries on the Milken list were Singapore, Hong Kong and Malaysia. This means that Estonia’s economy is sensitive to such factors as the strength of demand in its main export markets.