Reuters: Estonia is the calmest Baltic state
06.12.2010, 11:59Estonia, the smallest of the Baltic states, is also the calmest of the three and its government's prestige has actually risen after getting the green light to enter the euro zone from January 2011, writes Reuters in its report on political risks in the Baltics.
Reuters says that Estonia's centre-right coalition seems well placed to win a parliamentary election in March.
Euro zone entry in January is expected to boost the ruling parties in elections due in March 2011 and would keep Estonia on a centre-right path, Reuters writes.
The government of Estonia has said it will continue to pursue a conservative fiscal policy. Estonia's budget deficit is already the smallest in the European Union.
On the economic front, the three nations have begun shaky recoveries from the double digit output drops recorded in 2009.
Estonia achieved euro entry as it set aside budget funds during the boom years, which cushioned it from the downturn.
As Reuters notes in its report, euro zone entry could improve investor confidence in Estonia and give the country's economy a boost, which would have positive spillover effects on the rest of the region. Concerns over a return of labour shortages may, though, temper investor interest.
Some economists predict years of slow growth based on exports, making sure Estonia remains competitive within the euro zone.