Estonia: country overview

05 June 2012
by Ina Dimireva -- last modified 12 February 2013

Estonia, a 2004 European Union entrant, has a modern market-based economy and one of the highest per capita income levels in Central Europe and the Baltic region. Estonia's successive governments have pursued a free market, pro-business economic agenda and have wavered little in their commitment to pro-market reforms.

Estonia flag

Year of EU entry: 2004

Member of Schengen area:Yes

Political system: Republic

Capital city: Tallinn

Total area: 45 000 km²

Population: 1.3 million

Currency: euro, Member of the eurozone since 2011

Listen to the official EU language: Estonian

Estonia map

Country overview

Estonia, the most northerly of the Baltic states, regained its independence from the Soviet Union in 1991. It is a mainly flat country on the eastern shores of the Baltic Sea, with many lakes and islands. Much of the land is farmed or forested.

The Estonian language is closely related to Finnish, but bears no resemblance to the languages of the other Baltic republics, Latvia and Lithuania, or to Russian. About one quarter of the population is of Russian-speaking origin.

The capital, Tallinn, is one of the best-preserved mediaeval cities in Europe, and tourism accounts for 15% of Estonian GDP. The economy is driven by engineering, food products, metals, chemicals and wood products.

Throughout history, many other nations that ruled the region – Danes, Germans, Swedes, Poles and Russians – have influenced Estonian cuisine. Among the traditional dishes are marinated eel, blood sausage and sauerkraut stew with pork.

Famous Estonians include the writer Jaan Kross whose work has been translated into at least 20 languages, the author of the national epic (Kalevipoeg) Friedrich Reinhold Kreutzwald, and the writer, film-maker, diplomat and politician Lennart Meri.

Economy overview

Estonia, a member of the European Union and the eurozone since 2004, has a modern market-based economy and one of the higher per capita income levels in Central Europe and the Baltic region. Estonia's successive governments have pursued a free market, pro-business economic agenda and have wavered little in their commitment to pro-market reforms. The current government has followed sound fiscal policies that have resulted in balanced budgets and low public debt. The economy benefits from strong electronics and telecommunications sectors and strong trade ties with Finland, Sweden, Russia, and Germany. Tallinn's priority has been to sustain high growth rates - on average 8% per year from 2003 to 2007. Estonia's economy fell into recession in mid-2008 with GDP contracting 14.3% in 2009, as a result of an investment and consumption slump following the bursting of the real estate market bubble and a decrease in export demand as result of economic slowdown in the rest of Europe. Estonia rebounded nearly 8% in 2011 and the Estonian economy now has one of the higher GDP growth rates in Europe. Estonia adopted the euro on 1 January 2011.