Margus Rink, president of Coop Bank, said in „AK” that the Estonian economy shrank by 3 percent in the fourth quarter of last year and despite Estonians consuming 8 percent less last year, there are signs that the economy is leveling off. And begins to recover.
Why is Estonia at the top of the EU in terms of recession?
The reason is geographical location. Over the past three years, all major trade with its eastern neighbors has collapsed. Also, we live in the darkest and coldest corner of Europe, where energy demand is high and energy prices have risen sharply in recent years.
Also, Estonians want to be fairly paid for their work. We no longer compete with cheap labor in places where prices are low. This has reduced Estonia's competitiveness. This is why economic recession is worse than other countries.
Statistics show that Estonians are consuming less and there is uncertainty about the future. Is this concern reflected in the data you receive from the bank?
Absolutely. A very basic example is that customers apply for fewer loans. Overall, there were 25 percent fewer loan applications last year.
Another interesting trend we see with corporate clients is that they are reluctant to start new companies because they don't have a support base – they don't realize where interest rates are going, what tax rates are going. Will be, or what the wage growth numbers are. Thus, lacking a base of support, the businessman floats like a swamp. Need confirmation. Fortunately, this ground has recently begun to break: Euribor has reached its peak, and the ECB indicates that (interest) rates will start to fall this spring-summer.
We also see that energy prices are not as stable as they were in the fall of 2022. Wage increases are not 10 percent and inflation has stopped. I think that entrepreneurs will be able to undertake new business projects, create new jobs, economic growth will come, more taxes will be paid into the state budget, and then there will be less need to raise taxes.
You are very confident. There is a lot of talk about companies hoarding cash from good times and hoping things will improve. Do you estimate that unemployment will rise quickly if there is bad news this year as well?
Regarding the economic forecasts, I am more optimistic than the Bank of Estonia. At the moment, unemployment is only 7 percent and we have endured three years of people relying on their own reserves.
In banking, we can see that we are not in debt. People have jobs and can pay their mortgages. Now we're seeing the first signs of climbing out of this hole, and the chin is on the hole, and it can't get any worse from there.
It is doubtful whether we can all jump out of the hole at once. Falling into the hole is a long process, now we have to climb out. The economy is cyclical; We expected the fall, we were at the bottom and still showing signs of not being afloat.
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„Oddany rozwiązywacz problemów. Przyjazny hipsterom praktykant bekonu. Miłośnik kawy. Nieuleczalny introwertyk. Student.