Bank of Estonia: Economy doesn’t need fiscal policy stimulus

President of the Bank of Estonia Ardo Hansson. (Bank of Estonia)
10/8/2016 12:50 PM
Source: BNS
Category: Business

Governor of the Bank of Estonia, Ardo Hansson, wrote in an opinion piece in daily Postimees on Thursday that the Estonian government shouldn’t increase spending to boost demand, like the International Monetary Fund (IMF) suggested.

Due to the high wage growth, this would jeopardize the state's competitiveness, Hansson said.

The recommendations of the IMF mainly concerned states where unemployment was high and employment low, and therefore demand was also low, Hansson added. "It is a big problem in several eurozone countries where unemployment is much higher than before the global economic and financial crisis," Hansson wrote.

"In Estonia, the situation is different — our employment rate is the highest in 20 years, and unemployment is quite low," Hansson said. He therefore didn’t see a reason to increase the government spending, he added.

He also pointed out that the European Union was experiencing a paradoxical problem. The countries that needed to activate their economy couldn’t, due to a large government debt, while in countries where it could be done it wasn’t necessary.

Editor: Dario Cavegn

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