Price of coronavirus crisis for Estonia at least €1.57 billion
The COVID-19 crisis has cost the Estonian economy at least €1.57 billion and 20.8 million work-hours. The effects of the crisis are not yet reflected in subsistence statistics, with damage done to education difficult to gauge, expert Uku Varblane writes in the Riigikogu Foresight Center blog.
"Data from Statistics Estonia suggests that even though the economic impact of the crisis has proved more modest than initially feared, the Estonian economy nevertheless contracted by 2.9 percent in 2020. This means that the Estonian economy was smaller by €1.57 billion compared to pre-crisis forecasts," Varblane finds (link in Estonian).
He points out that €1.57 billion is two and a half times Estonia's defense spending for 2021 (€645 million) and more than five times the research and development budget (€282 million).
10,000 more unemployed than forecast
Varblane notes in his overview that if registered unemployment was 5 percent in 2019 for 32,124 unemployed persons, with forecasts by different agencies suggesting it could grow to 5.7 percent by late 2020 due to the cooling labor market, registered unemployment really came to 7.3 percent or 53,794 unemployed persons by the end of 2020. "This means that forecasts missed the real situation by around 10,300 people or the entire population of the city of Paide," the expert writes.
Based on the normal working hours for last year – 2,015 hours – Estonia has missed out on 20.8 million work-hours because of the coronavirus crisis. "These are work-hours not spent on creating new value. The actual figure is much higher still as many people have been forced to work part-time in the crisis," Varblane remarked.
The expert said that the effects of the crisis are not very clear yet in subsistence statistics, while the reduction in the number of people on subsistence benefits has been falling notably more slowly than in previous years. "It is to be believed that the crisis has not yet impacted people's coping because of unemployment insurance benefits and other support instruments that have helped people maintain a sensible standard of living. Banks have also offered housing loan payment holidays which people have made use of quite a lot."
However, the consumer confidence indicator reflects uncertainty for the future, with confidence some 20 percent lower than the long-term average. Feelings of security have fallen twice as much in the lowest income quartile than they have in the highest.
"This reflects the crisis' different effect on various social groups, there being winners and losers and the danger of deepening inequality. While relative poverty figures for 2020 are not in yet, it is to be believed they will convey the same message," Varblane said.
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Editor: Marcus Turovski