Estonia’s current-account surplus at record high
15.11.2011, 12:10Estonian central bank Eesti Pank said yesterday that the September current-account surplus was 150 million euros in September which is the highest figure for two decades, writes Äripäev.
Most analysts interviewed by Äripäev agreed that it is a positive macroeconomic news which shows that Estonian economy earns income from exports and is well prepared if the eurozone economy slows down.
Economist Andres Arrak says that the last time that the current account was in surplus was in 1992. To put it simply, when the current account has a deficit, the nation is spending more than it has earned which is possible only by borrowing. This borrowing must then be repaid in later periods with interest.
“The current-account surplus shows that Estonians are no longer crazy about consuming and they now buy more locally-made and cheaper goods,” said Arrak.
Another reason that has helped the Estonian current account to reach a surplus is that Estonia’s main trading partners have been buying more goods from Estonia.
Businessman Jüri Mõis says that there are signs showing that the Estonian businessmen are well prepared for a possible economic slowdown. “On the downside, current-account is in surplus partly because companies do not invest,” he said.
“What is important is that the investments made by enterprises are now bearing fruit in export markets,” said Mõis.
Hardo Pajula, chief analyst of SEB in Estonia, said that current-account surplus is reducing Estonia’s foreign debt which until now has been decreasing mainly on account of EU aid.
Pajula said that it may be too early to draw any long-term conclusions from the September figures as trade statistics is notoriously volatile.