Economist: High Time to Look to East for New Markets
According to Andres Arrak, Director of the Entrepreneurship Institute at the Entrepreneurship University of Applied Sciences, Estonia should now look to the east instead of the west in search of new export markets.
On Monday, Minister of Finance Jürgen Ligi admitted that the debt crisis threatens Estonian economy as well despite the country's sound financial situation. According to Ligi, a small economy will always be vulnerable to external influences when it comes to the demand for exports, the availability of capital, and investments, reported ETV.
Estonia is highly dependent on external developments, which is why the government is currently paying close attention to what is happening in our export markets. For example, economic growth has already slowed down in Sweden, which to a great degree functions as an export indicator for Estonia, according to the Finance Minister.
This will bear a direct impact on the soon-to-be-published budget estimate, which is not going to be very optimistic, according to Ligi. It is too early to say which spheres of life the debt crisis has already had an impact on - as usual, this will become clear after the relevant statistics have been collected.
Member of the supervisory board of Tavid AS and former economics minister, Meelis Atonen has suggested that the rise of the price of gold to a record level clearly shows that Europe is already in the throes of a serious financial crisis.
"The record price of gold demonstrates how weak paper currencies are, and in the light of recent events, it clearly shows that investors have no faith in what the European and American political leaders and central bankers have been doing to remedy the situation. In fact, it shows that people do not believe that the steps that have been taken will be enough to solve the problem," said Atonen.
Another voice of warning, economist Raul Eamets says there is no good news when it comes to the prices in Estonia, because the prices of imported goods will continue to rise.
"We cannot escape a price hike. Or to put it into a wider perspective, the strengthening of the euro and the decline of the dollar have dealt a rather painful blow to our export sector. Our goods will become more expensive abroad," noted Eamets.
Now, Estonia should start looking for new export markets outside Europe.
"We did very well, we were very quick. We moved all our exports from the east to the west. Now it seems to me that we basically have to make a similar turn back, although not as quickly. Only, further to the east, say, to the opposite shores of the Pacific, where the growing markets are now," said Andres Arrak.
According to Arrak, the European consumer binge that lasted for years has come to an end. Estonia will probably never manage to develop a society that would live beyond its means to such a vast degree - on borrowed money.
Sigrid Maasen