While the Estonian economy did better in the first quarter of the year than expected compared to other European countries, the large decrease in investments and trading means that it is hard to create profit, LHV Group's chairman, Madis Toomsalu has said.
Speaking on ETV's current news show "Aktuaalne kaamera" Toomsalu said while the 7 percent decrease in the Estonian economy is a better result than expected, temporary trends should not be overemphasized.
"When looking behind the numbers, what is causing concern, is that the investments decreased by 15 percent and trade by 20 percent. With declining trade, it is hard to create wealth," Toomsalu said.
According to Toomsalu, another important factor, which effects are only just beginning to appear, are the state labor market measures alleviating the effects of the coronavirus pandemic which ended in June. "This means companies can't lay off employees for two months after that. The starting point for the redundancies will be in September," he said.
What will happen to the economy in the autumn is not entirely clear because of different variables, Toomsalu said. However, if the second wave arrives in Estonia, the government should really consider where to direct the subsidies.
"Maybe it has been learnt that a complete lockdown doesn't work. When to be constructively critical then this business support package through direct loans, through bank guarantees - it was clearly not used," Toomsalu said.
Speaking about the money borrowed by the government, Toomsalu said, in his opinion, Estonia should create so-called green bonds.
"We can take Germany as an example - bonds that should be invested in green projects. It is probable that Estonia could borrow at a negative interest rate in the case of a long-term bond so that investors pay the taxpayer extra money instead."
Toomsalu said that it is important to understand that the structure of the economy is changing and everything green will continue to grow. "Estonia is in a chaser's role a little bit and the brave raise their heads to think maybe it's the point where we should reorientate," he noted.
Editor: Roberta Vaino