Industrial Production Growth No Panacea, Says Economist
Heido Vitsur, the Development Fund's economics analyst, has downplayed the significance of newly-released industrial production figures, saying that the rapid growth in volumes seen recently won't do much to bolster the economy.
On April 29, Statistics Estonia announced that year-on-year industrial production growth had topped 30 percent for the seventh month in a row.
However, in a Postimees article published later in the day, Vitsur responded that the growth will have a relatively small impact on Estonia since industrial production accounts for only 20 percent of the nation's jobs.
"If you look at the structure of the economy, the share made up by industry is rather small. The growth in industrial production is not linked with salary increases or job creation, and there's almost no consumption in the industrial sector," he said.
By contrast, he said, in Finland industry accounts for twice as big a share of jobs and GDP.
Vitsur also advised against hoping that growth in the service sector, which makes up the bulk of the nation's economy, would push the country forward. With the exception of banking and IT, productivity in that sector is average, he said.
Instead he recommended that the government set targets for increasing the share of the economy made up by industry.
Steve Roman