Consumer optimism returns

TALLINN - The director of the Estonian Institute of Economic Research, Marje Josing, says that people in Estonia no longer fear losing their jobs and are more optimistic about the economic outlook for their families as well as for the country, reports Aripaev Online. Josing noted, when commenting on the recently published consumer confidence index, that the biggest change in the improvement in the consumer confidence indicator involves the estimations on the labor market. “Consumers’ fears of unemployment are much lower than a year ago,” she stated. According to her, a relatively good assessment was also given on the Estonian economic outlook. “Consumers perceive the likelihood of adopting the euro and the economic invigoration and have given these developments their positive assessment,” added Josing.

The June consumer barometer survey carried out by the Institute showed that the consumer confidence indicator was minus 3, improving by 2 points in comparison to May. The indicator has been moving in a positive direction since March 2009, and has now risen to the highest level in the past two years. Forty-two percent of those polled expected that in the next 12 months the state’s economic situation would improve. Twenty-eight percent expected the situation to stay the same, while 23 percent feared that it would deteriorate. Expectations on the financial situation in the respondents’ own households in the next 12 months improved, from -3 in May to -1 in June.

Whereas at the deepest economic decline point in March 2009, 54 percent of residents estimated that the unemployment rate would grow significantly during the following 12 months, now there were only 5 percent of such respondents.
Household finances did not change much in June in comparison to the previous month. Thirty-six percent of families were hoping to increase their savings in the next 12 months; 51 percent are making ends meet and 13 percent are sustaining themselves on previous savings or are in chronic debt.

Due to a decline in income and the high unemployment rate, residents’ savings capacity is bad, and 62 percent of respondents estimated that in the next 12 months it is not likely that they would be able to save money. Many households are balancing their finances due to significant cuts in expenditures. The outlook on purchasing durable goods is still weak, but slightly more hopeful than in the past year.

Josing pointed out that in responses to questions that directly concern the household economic situation - the financial status, savings capacity, prospects on buying durable goods, etc. - there are fewer changes. She said that the positive aspect is that the economic crisis has not significantly increased the number of people in Estonia who are completely destitute. She said that the share of people who live off debts and are spending previous period savings has always been approximately 10 percent. “People have cut their everyday spending and they are handling their finances. This demonstrates that Estonian consumers are reasonable and rational and are able to manage in the situation of a crisis,” she commented.