Estonia: Something Doesn't Seem Right

Of the three Baltic nations, Estonia is being held up as the most lucky one in the economic meltdown of 2008/2009. Recently the rating agencies upgraded their outlook for the Baltic region amid clear signs of recovery. Something kinda doesn’t seem right when the leading newspaper in Estonia reports that the number of insolvent companies in the country is at a record high level.

“2009 was the first year that we had more than 1,000 companies that went bankrupt.”

Alar Jäger

A total of 1,055 commercial undertakings and 14 non-profit organizations were declared insolvent in Estonia in 2009. This is 2.5 times more than in 2008 and means that one in every 133 companies in Estonia went bankrupt last year, the Estonian newspaper Aripaev reports.

And local credit agencies estimates that as many as 1700 Estonian companies may go bankrupt in 2010.

Half of the 1,055 companies were declared bankrupt and half did not have sufficient means to go through the proceedings, according to Aripaev.

“2009 was the first year that we had more than 1,000 companies that went bankrupt,” says Alar Jäger, deputy manager of private credit information provider Krediidiinfo.

Jäger says that, in comparison, only 202 companies went bankrupt in 2007 and between 2003-2005 and in 2008 between 400 and 460 companies went bankrupt.

Out of 1,055 companies that went bankrupt, 268 were construction companies, up from 68 construction companies in 2008. 149 manufacturing companies and 58 accommodation and catering enterprises also ended up in bankruptcy.

The list continues with the real estate sector, followed by wholesale and retail sector companies.

Krediidiinfo estimates that the number of companies that go bankrupt this year could amount to 1,700, especially in the construction business, accommodation business and catering business.

The “Recovery”

Both rating agencies and bank analyst have recently upgraded their outlook for the Baltic region.

Last week Moody’s Investor Service said that it raised outlooks for the three worst nations in the European Union in stipulations of financial turn down last year, Estonia, Latvia and Lithuania, thanks to the entire constancy in the market and enhanced predictions for revival.

Moody’s analysts were flattering Estonia’s “impressive fiscal performance” last year and that it has possibilities to adopt the Euro in 2011.

Estonia is seen of as the toughest of the three nations, and now has a A1 on investment rank and ratings.

Due to Latvia and Lithuania’s high deficits and extreme debt load, the agency has kept it under investment grade or ratings.

Moody’s says in their statement that Latvia and Lithuania hope to join the euro zone in 2014, with Estonia to join already next year.

Well, based on the last two years of experience; a lot can happen in a year…

Related by the Econotwist:

Latvia To Split And Sell Nations Leading Bank

Estonian Newspapers Protesting With Blank Front Page

Businessman To Declare Hunger Strike If Not Paid

Baltic Tax Authorities Increase Money Hunt

An Estonian Mystery

Standard and Poor’s: The Baltic Are Stabilizing

Swedbank Buy Greek Bonds With Estonian Money

Estonia Put Pressure On Journalists

Baltic Countries Remain In Recession

Swedbank In Estonia: “Daylight Robbery”

Nordic Central Banks Agree On Baltic Bank Bailout


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Filed under International Econnomic Politics, National Economic Politics