Estonia's economic waltz. Or the difficult art of forecasting
(BRUSSELS2) Touted as a model, with its flat tax (single tax at a low rate), insolent growth (with an average of 4% per year) and low debt, Estonia had it all. Especially in Brussels in the late 2010s, marked by a rather unbridled (and angelic) liberalism.
A rosy future...
In an economic catch-up position, this small country of barely one and a half million inhabitants, nestled between Russia and Finland, overtook its rivals in Eastern Europe. He thus arrived at the 3e ranking of the new Member States behind Slovenia and the Czech Republic at 69% of the European average. In 2004, the Commission therefore predicted a rosy future for the small Baltic republic. " The inflation projection (…) around 3% from 2004, seems realistic wrote the 27 in a report published at the end of December 2004 in the official journal.
Backlog
A singular optimism! Inflation will exceed 4% from 2005, will reach 7% in 2007, ie before the crisis, a symptom of an overheated economy. And an artificial bubble. At the end of 2007, the real estate bubble burst. The economic crisis is coming. The national economy is collapsing. Unemployment rose from 4 to 18% in one year (from 2008 to 2009). The gross domestic product (GDP) fell by 14% in 2009! Inflation breaks through to more than 10% in 2008! The country having meanwhile switched to the Euro, inflation remains outside the Maastricht nails, failing to return, even below the 4% mark.
Conclusion: economic forecasting is a difficult art, all the more so when it is mixed with a political flaw, consisting in not looking at the facts but in transforming the facts to make a political model of them.
