Estonia

Estonia: remains resilient

The EPI grades Estonia’s current economic performance at a B+ level, with the EPI score projected to be close to 95.1% in 2016, strong improvement from a C+ level in 2012. Estonia’s low government debt of about 10% of GDP and strong fiscal position of the government, along with a consistent track record of structural reforms supports further income convergence towards the European Union averages.

Estonia’s recovery has been on track, with GDP growth projected to be 2% in 2015, slightly below 2.9% in 2014. Employment continues to grow with unemployment declining, reaching its lowest rate since the onset of the 2008 crisis. Following substantial fiscal adjustment in 2014, the government increased budget deficit in 2015 but the budget deficit is projected to be only 0.7% of GDP in 2015. Inflation remains low, driven by low commodity prices and disinflationary environment in Europe.

The 5-Minute Economist projects Czech Republic’s EPI score to remain at current levels in the medium term with only a gradual improvement to 95.7%, or an A- level, by 2020, driven by economic growth acceleration and lower unemployment rate, despite a gradual pick-up in inflation.