Analyst: Estonia should manage a half-year crisis

Kristo Aab.
Kristo Aab. Source: Kadri Põlendik/ERR

Should the spread of the novel coronavirus and associated impacts on global markets be limited to just half a year, the Estonian economy should be able to manage it without any more significant losses, LHV economic analyst Kristo Aab said.

"I believe that if the coronavirus panic remains a half-year story, then nothing will happen to the Estonian economy," Aab said on morning program "Vikerhommik" on Tuesday morning. "Companies have their own buffers as well as sufficient flexibility. Should the epidemic stick around for longer, then our economy will start to be impacted."

He noted that companies should always have a crisis plan, and was sure that bigger companies do. "They should be capable of surviving a crisis of a couple of quarters," he added.

Regarding which sectors of the economy would be the first to take a hit in Estonia, Aab noted the transport and tourism sectors. "The manufacturing industry to some extent as well, as it is dependent on global supply chains," he added.

Estonia's oil shale sector has likewise already suffered and will continue to suffer due to low oil prices, the analyst noted. "Dangers already exist there," he said.

Discussing how a possible crisis could most directly impact regular people, Aab cited potential job loss as a concern. "For the average person in Estonia, what is most difficult is if they lose their job, their income," he said. "Considering the structure of Estonian families, the entire family often then ends up in trouble."

But it's too early yet to worry, he continued. "Our economy is fairly strong, the labor market is blossoming, and unemployment is low," the analyst noted. "When the panic passes, our economy should be in a similar state to what it was going into it."


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Editor: Aili Vahtla

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