TALLINN - Estonia’s Ministry of Finance stated on Aug. 30 that the real growth in the productivity rate – added value per employee – was positive for the third quarter in a row in the second quarter of 2010, reports Postimees Online. The real growth in the productivity rate reached 9.2 percent in the second quarter.
Analysts at the ministry estimate that the imbalances on the labor market that emerged during the boom years are decreasing. The ministry assessed that companies have started working more efficiently, and have adjusted their work processes so that fewer employees are needed.
The increase in the average pay in the second quarter of 2010 turned out to be slightly higher than the Ministry of Finance expected in its most recent economic outlook. The pay growth was affected by the improved economic situation and the increase in wages in exporting sectors due to the growth in production volumes caused by the increase in external demand.
The ministry stated that the average pay is expected to continue growing in coming quarters.
Nordea estimates support this improved outlook, as it raised its growth forecast for the economy to 1.8 percent, revising its June forecast for economic growth for 2010 of 1.2 percent, writes National Broadcasting. The bank predicts that in 2011, Estonia will see growth of 4.2 percent. “We adjusted our economic growth outlook upwards for 2010 and 2011, taking into account the recovering export demand and expected growth in domestic demand, particularly in connection with the adoption of the euro in 2011,” said chief economist of Nordea Markets in Estonia, Tonu Palm.
“The high global trade activity level is of extreme importance for the fast recovery of economic growth in Estonia,” explained Palm, adding that setbacks in the Nordic countries or in Russia will also affect the speed of the economic recovery in Estonia.
He also noted that the fast growth in external demand has boosted significantly the economic recovery in the Baltic States, Poland and Russia. “In the beginning of next year the external demand is expected to decline while labor market trends are indicating an improvement and are paving the way towards gradual recovery of domestic demand,” said Palm.