Estonia in a year after the introduction of euro: what awaits Latvia

Transition of Latvia to euro from 1 January 2014 allows us today to remember how this transition proceeded in the neighbouring Estonia three years ago and the outcomes by the end of the first year of living in eurozone.

 

On 1 January 2011 Estonia became the 17th state of the European Union that has waived the national currency (the Estonian Croon) and adopted euro.

 

Entrance of Estonia into the eurozone and withdrawal form the crown was, in general, positively received by the population of the country at the end of the first year of "euro-life", although, as in any other matters, there are also some particular opinions. For example, there is an obvious contradiction between the expectations and the reality.

 

Despite assurances of politicians and bankers, introduction of euro did not stop inflation in the country: if in 2009 deflation was minus 0.1%, and on the eve of introduction of euro the rise in prices in 2010 was 3%, the figures in 2011with Euro already were obviously not comforting – increase of inflation reached 5%. Subsequently, it must be recognized that the fall of U.S. dollar against euro in the first half of the year was obviously advantageous leading to the notable drop of prices for goods and products manufactured outside the European Union that restrained total figures of Estonian inflation. However, the growth of rates, excise duties and other indirect taxes and the increasing fuel prices throughout the year, have gradually nibbled the income of Estonians by bits and pieces here and there .

 

Not incidentally, if at the beginning and the first half of the year a cautious growth of optimism was fixed in all social polls, somewhat sad and negative estimates and projections started dominating by the end of the year already. Many immediately recalled that Estonia is the poorest Eurozone member and only the 113th economy in the world. Statistics recorded steady decline of income of Estonians since the autumn of 2008, and euro here, unfortunately, did not become a lifesaver. In addition, negative external news from the Eurozone, including forecasts and repeatedly voiced collapse of it, have hardly painted the first anniversary of the Estonian "euro-life in glowing colours." 

 

 

World media monitoring

 

 

  

 

17.01.2014

 

 

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