Impact of COVID-19

The virus crisis gives an opportunity to restart the economy

According to the report of the Foresight Centre “The Impact of the Virus Crisis on the Estonian Economy. Scenarios up to 2030,” the virus crisis provides a unique opportunity for renewing the structure of the Estonian economy. In the economy, the crisis will accelerate the trend to automatise and digitise the processes and carry out the plans for innovation urgently.

“Change of global economic relations will gain impetus with the corona pandemic. Those economic sectors and businesses that are fed by the trends of automation, digitalisation and moving into virtual channels, as well as those that benefit from the tightening environmental requirements, are the winners,” Head of the Foresight Centre Tea Danilov said. “Due to the virus, the future arrived sooner, and when the crisis is over, our economy and society will more digital by several degrees.”

Tea Danilov noted that Estonia had to choose between costly preservation of the existing economic structure and finding a new way. “With each day, the possibility that when the virus crisis is over, we can continue from where we were in spring grows smaller. The crisis has changed the world too much in the meantime,” she added. “The changes caused by automation and digitalisation will also reach the labour market quickly, and the jobs of people with middle level of skills will be threatened the most, while the shortage of top specialists increases.”

The report “The Impact of the Virus Crisis on the Estonian Economy. Scenarios up to 2030” presents three scenarios on the future of the Estonian economy. “Estonia has to decide in the virus crisis if we will try to save as many businesses as possible with the help of the taxpayer, or create a favourable economic environment and leave the businesses in the mercy of the market forces, or strive for modernisation of the economic structure of the country with the support of the government,” expert of the Foresight Centre Uku Varblane said. 

  • Scenario “The economy on hold”
    Preservation of existing businesses and jobs, and avoiding the worsening of social situation is considered the most important. In order to restore economic growth, supporting large and strategic enterprises is given priority.
  • Scenario “Two-Speed Estonia”
    In the economic policy, the ability of self-modernisation during the crisis is mainly relied on, and the social-political expenses are kept under control so that the business environment would not be damaged.
  • Scenario “Super-Estonia”
    The crisis is to be used for modernisation of the economy, but on the condition that the winnings and losses are distributed reasonably between different layers of the population, and agreement on other important choices concerning the life in Estonia, like the use of natural resources, is reached. Modernisation of economy and infrastructure in accordance with the digital and green transition agenda of the European Union is a priority.

The Foresight Centre is a think tank at the Chancellery of the Riigikogu that analyses long-term developments in society and the economy. The Centre conducts research projects to analyse the long-term developments in Estonian society and to identify new trends and development directions.

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