Blog AnalysisEconomy Euro zone

Estonia's economic waltz. Or the difficult art of forecasting

Tallinn, the Estonian capital (Source: Visit Estonia)
Tallinn, the Estonian capital (Source: Visit Estonia)

(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 a position of economic catch-up, this small country of barely a million and a half inhabitants, nestled between Russia and Finland, was overtaking its Eastern European rivals. He thus arrived at 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 projection relating to inflation (…) around 3% from 2004, appears realistic wrote the 27 in a report published at the end of December 2004 in the official journal.


A singular optimism! Inflation will exceed 4% from 2005, reaching 7% in 2007, i.e. before the crisis, a symptom of an overheating economy. And an artificial bubble. At the end of 2007, the real estate bubble burst. The economic crisis occurs. The national economy is collapsing. Unemployment climbs from 4 to 18% in one year (from 2008 to 2009). Gross domestic product (GDP) fell by 14% in 2009! Inflation rises to more than 10% in 2008! The country having meanwhile switched to the Euro, inflation however 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 bias, consisting of not looking at the facts but transforming the facts to make a political model.

Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).