TALLINN - In an interview to Postimees, Hansabank Group Chairman Indrek Neivelt said that the Estonian economy was far from healthy and that there might be serious setbacks over the next few years.
"The current way of living shows that people are selling property to finance their needs. For instance, they sell a cow on one day, then the second on the next day, and on the third day they purchase a new colorful, soft chair," said Neivelt.
"This model is not working if the chair in question is not in a dentist's workplace."
The banker's statement comes at a time when the statistical office reported that Estonia's third-quarter growth was 4.3 percent, and the Central Bank announced that it expected Estonia's economy to grow 5.2 percent next year.
Neivelt said that current economic growth was based on cheap consumer credit and high consumption levels and that such growth was not sustainable.
Indeed, a recent survey by TNS Emor, a pollster, shows that Estonians are borrowing more money in greater amounts and for longer payback periods.
According to the survey, 35 percent of Estonian families and households had a loan, a lease, an installment or credit card debt.
What's more, during the next 12 years, 24 percent of households surveyed said they planned to use various credit opportunities.
However, TNS Emor said that there had been a significant structural change in the ownership of financial obligations: namely, the percentage of installments and consumption loans has been decreasing, while long-term and larger loans have been on the rise.
Essentially, pollsters inferred that Estonian consumers are less likely at present to take loans for purchasing household equipment, electronics, furniture and interiors, while they are increasingly willing to borrow for the sake of acquiring a home.
According to the study, 13 percent of households have housing-related loans and 17 percent of households have installment obligations.
Another key change indicated by the survey results is that the segment of the population with lower purchasing power is coming to the market of housing loans.
"This means that the demand for cheaper housing is likely to increase in the near future," said a representative of TNS Emor.
Hansabank's Neivelt added that there were no easy ways to prevent an imminent crisis.
"Single banks cannot do much to alleviate the situation. We need to change the way we think about exporters and businessmen," he said.
Neivelt said that the Estonian economy was comparable with a small district in some large city. If this district begins to borrow heavily and build as much as it can, one can be sure that there will be time when no one builds anything there for the next 10 years.
If in such cities workers can move from one district to another in search of work, then there is less to worry about, explained Neivelt. But Estonia's labor market was not that flexible yet, he added.
The Hansabank chairman recommended the government provide more support to Estonia's exporting industry.
