Estonia Business Forecast Q1 2007

Content

• Chapter 1: Political Outlook
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Political Risk Ratings
  • Domestic Political Outlook
  • Government Split As Elections Approach
  • The two centre-left parties have united, much to the concern of the right The two were unable to secure a second
  • term for their candidate in the recent presidential elections But it may require strengthened cooperation between
  • the centre-right parties to prevent the left forming the core of the next government and pushing forward a populist
  • agenda, following elections in March 2007
  • Table: Estonian Cabinet & Other Key Posts (As Of October 2006)
• Chapter 2: Economic Outlook
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Economic Risk Ratings
  • Introduction
  • Closing The Gap, But Too Quickly
  • The economy is expanding at a blistering rate, but there are concerns about the risks to macroeconomic stability
  • from rapid economic convergence with the country's EU peers Output growth will need to return towards potential
  • over the next year or two if a boom-bust scenario is to be avoided
  • Economic Activity
  • From Red Hot To White Hot
  • Booming domestic demand and robust export performance pushed the rate of economic expansion to 117% in
  • H106 Diminishing resource slack, slowdowns in eurozone and world growth, and the maturing of the credit cycle
  • should contribute to a gradual deceleration in output growth in 2007-08, albeit to still comparatively high rates
  • Table: GDP, Output & Population
  • Table: GDP By Economic Activity, % change in real terms
  • Monetary & Exchange Rate Policy
  • EMU Remains Out Of Reach Despite Peaking Inflation
  • Headline inflation probably peaked in August, at 50% y-o-y, and price growth is expected to trend lower in 2007
  • as global oil prices gradually decline However, upward pressure on core inflation - measured as the headline
  • rate excluding energy and unprocessed foods - is expected to persist, thereby prolonging Estonia's stay in ERM-2
  • and delaying euro adoption to 2010-2011
  • Table: Consumer & Producer Prices
• Chapter 3: Special Report
  • BMI Sovereign Risk Ratings
  • What And Where Are The Risks?
  • Table: BMI Sovereign RIsk Ratings
  • Emerging Europe
  • Diverging Ratings Trends
  • Table: Emerging Europe Sovereign Ratings - Evolution of Ability to Pay
  • Table: Emerging Europe Sovereign Ratings - Evolution of Willingness to Pay
• Chapter 4: Business Environment
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Business Environment Risk Ratings
  • Legal Framework
  • Labour Force
  • Table: Demographic Indicators
  • Table: Employment Indicators
  • Foreign Investment Policy
  • Table: Emerging Europe, Annual FDI Inflows
  • Table: Estonia, Annual FDI Inflows
  • Foreign Trade Regime
  • Table: Top Export Destinations
  • Table: Estonia: Value Of Exports By Category (US$mn)
  • Tax Regime
• Chapter 5: Key Sectors
  • Infrastructure
  • The Estonian construction industry is buoyant, with the value of production of construction enterprises reaching
  • US$410mn, during Q106 Propelled by the ongoing construction boom, construction material companies are resorting t
  • o major expansion programmes Estonia's construction industry is likely to top US$1bn in 2007, and BMI forecasts the
  • industry to log an average growth rate of 728% over the 2006-2010 period
  • Table: Infrastructure - Historical Data & Forecasts
  • Pharmaceuticals & Healthcare
  • The Estonian pharmaceuticals market was worth an estimated US$1838mn at consumer prices in 2005. According
  • to BMI's latest growth forecast, the total pharmaceuticals market will grow at a 68% compound annual growth rate
  • (CAGR) to 2010, reaching US$253mn
  • Table: Estonia Drug Market Forecast, Expenditure Indicators