Foresight Center: Estonian economy vulnerable in COVID-19 second wave
The information technology and communications sector was the least hit by the first wave of the coronavirus in spring, while accommodation providers, caterers and travel agents found themselves in the most difficult situation. This means Estonia is entering the second wave in a vulnerable position, a report by the Riigikogu Foresight Center concludes.
The center's COVID-19 resilience index finds that information and telecommunications, healthcare and forestry sector companies have held up the best in the crisis.
"The Estonian economy will rely on these relatively more virus-proof sectors in the coming years, expert for the center Uku Varblane said.
The crisis has hit accommodation providers, caterers and entertainers the hardest.
"The Estonian economy is meeting the second wave of the coronavirus in a relatively vulnerable state," Varblane said. "Several sectors have used up reserves waiting for the situation to improve and now find it more difficult to weather the second wave," he added.
According to Varblane, companies have postponed investments and R&D activities in several sectors that is having a negative effect on other areas.
"Because companies in certain sectors are directly affected by the virus threat, it could cause economic structure to change – more virus-proof sectors will find it easier to develop," Varblane explained.
The more vulnerable sectors are responsible for 14 percent of value added and employ every fifth worker in Estonia.
The COVID-19 resilience index measures the extent to which economic sectors are affected by the coronavirus crisis. The index is based on companies' financials. Changes to the turnover of companies (summary turnover for March-August 2020 year-over-year) carry the most weight in the index, with changes to the number of employees on year and dynamics following the spring emergency situation also taken into account.
The index also looks at changes in labor expenses, profit and investments compared to the same period last year. The development of sectors has also been affected by long-term trends such as activities becoming increasingly technology-intensive.
The Foresight Center is a think tank attached to the Office of the Riigikogu tasked with analyzing long-term social and economic developments.
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Editor: Marcus Turovski