Eesti Pank Bank of Estonia Effects of the global crisis and euro on Estonia Ülo Kaasik

Effects of the global crisis on Estonia 2 Eesti Pank Bank of Estonia Estonia was hit hard by the crisis – global crisis on top of the domestic correction

Ülo KaasikEffects of the global crisis on Estonia 3 Eesti Pank Bank of Estonia Confidence fell rapidly due to regional problems, recent events have less implication

Ülo KaasikEffects of the global crisis on Estonia 4 Eesti Pank Bank of Estonia Shock on exports have been similar across the region

Ülo KaasikEffects of the global crisis on Estonia 5 Eesti Pank Bank of Estonia Exports have started to grow along with the global recovery

Ülo KaasikEffects of the global crisis on Estonia 6 Eesti Pank Bank of Estonia Still lot of capacity not utilised

Eesti Pank Bank of Estonia Sharp reaction in labour market

Ülo KaasikEffects of the global crisis on Estonia 8 Eesti Pank Bank of Estonia Reaction has been sharp in labour market – in terms of employment and wages

Ülo KaasikEffects of the global crisis on Estonia 9 Eesti Pank Bank of Estonia Participation rate has stayed high

Ülo KaasikEffects of the global crisis on Estonia 10 Eesti Pank Bank of Estonia But unemployment is probably structural

Ülo KaasikEffects of the global crisis on Estonia 11 Eesti Pank Bank of Estonia Boom time jobs have vanished

Eesti Pank Bank of Estonia Financial sector has survived it well

Ülo KaasikEffects of the global crisis on Estonia 13 Eesti Pank Bank of Estonia Non performing loans have stabilised Over60 d ays overdue loans to total portfolio 0% 2% 4% 6% 8% 10% 12% 14% üle60p viivises olevate laenude osakaal 2009sügisprognoos(põhistsenaarium) maksimaalne võimalik suhtarv10%kapitaliadekvaatsuse juures

Ülo KaasikEffects of the global crisis on Estonia 14 Eesti Pank Bank of Estonia Banks behaviour is very cautious

Eesti Pank Bank of Estonia Domestic demand is still sluggish and domestic inflation pressures low

Ülo KaasikEffects of the global crisis on Estonia 16 Eesti Pank Bank of Estonia Confidence indicators are improving ConsumersManufactConstrRetail tradeServices

Ülo KaasikEffects of the global crisis on Estonia 17 Eesti Pank Bank of Estonia We expect gradual improvement in domestic demand

Ülo KaasikEffects of the global crisis on Estonia 18 Eesti Pank Bank of Estonia CAD has reversed, probably cyclical phenomenon

Ülo KaasikEffects of the global crisis on Estonia 19 Eesti Pank Bank of Estonia Inflation development driven by foreign prices

Eesti Pank Bank of Estonia Government has reacted sharply

Ülo KaasikEffects of the global crisis on Estonia 21 Eesti Pank Bank of Estonia But still some work to do

Ülo KaasikEffects of the global crisis on Estonia 22 Eesti Pank Bank of Estonia Some conclusions Economy and policies have reacted quickly to the crisis. Majority of the adjustment is probely over. Many challenges still ahead: –What are the implications of the debt crisis in Europe –How to avoid structural unemployment? –Is financial system supporting the recovery enough?