Speaking at a conference for industry on Thursday, Deputy Governor of Eesti Pank Ülo Kaasik said that faster economic growth will require investment and the state can help with this by reducing uncertainty about the future for business.

Mr Kaasik pointed out in his presentation that survey data show the satisfaction of business with the Estonian state has declined steadily in recent years. There is concern about excessive bureaucracy and rapid and frequent changes in taxes.

He explained that increased productivity is a source of sustainable economic growth and it requires investment. “Right now is an exceptionally good time to invest by historical standards. But when businesses are asked what is hindering investment, they name two things: weak demand for exports and uncertainty about the future. The Estonian state cannot change the situation in foreign markets, but it can make businesses feel more certain. Faster economic growth needs the tax system to be stable and predictable”.

Eesti Pank finds that the Estonian economy is facing an unusual combination of weak economic growth and high demand for employees. Mr Kaasik noted that the government cannot help the economy by boosting domestic demand through a budget deficit. “Extra spending by the government would give little support to exports and would simply add fuel to a domestic economy that is already running well”.

Deputy Governor of Eesti Pank Ülo Kaasik was speaking on Thursday at an economic conference organised by the law firm Tark and the newspaper Postimees.

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