Estonia is economically deeply integrated with the economies of its northern neighbours, Sweden and Finland. As a member of the European Union, Estonia is considered a high-income economy by the World Bank. The GDP (PPP) per capita of the country was $ 29,312 in 2016 according to the International Monetary Fund. Because of its rapid growth, Estonia has often been described as a Baltic Tiger beside Lithuania and Latvia. Beginning 1 January 2011, Estonia adopted the euro and became the 17th eurozone member state.
According to Eurostat, Estonia had the lowest ratio of government debt to GDP among EU countries at 6.7% at the end of 2010. The IT sector's share in GDP has sharply increased since 2004. Skype was created by Estonian developers and is mainly developed in Estonia.
A balanced budget, almost non-existent public debt, flat-rate income tax, free trade regime, competitive commercial banking sector, innovative e-Services and even mobile-based services are all hallmarks of Estonia's market economy.
Estonia produces about 75% of its consumed electricity.In 2011 about 85% of it was generated with locally mined oil shale.Alternative energy sources such as wood, peat, and biomass make up approximately 9% of primary energy production. Renewable wind energy was about 6% of total consumption in 2009. Estonia imports petroleum products from western Europe and Russia. Oil shale energy, telecommunications, textiles, chemical products, banking, services, food and fishing, timber, shipbuilding, electronics, and transportation are key sectors of the economy. The ice-free port of Muuga, near Tallinn, is a modern facility featuring good transshipment capability, a high-capacity grain elevator, chill/frozen storage, and new oil tanker off-loading capabilities. The railroad serves as a conduit between the West, Russia, and other points to the East.
Because of the global economic recession that began in 2007, the GDP of Estonia decreased by 1.4% in the 2nd quarter of 2008, over 3% in the 3rd quarter of 2008, and over 9% in the 4th quarter of 2008. The Estonian government made a supplementary negative budget, which was passed by Riigikogu. The revenue of the budget was decreased for 2008 by EEK 6.1 billion and the expenditure by EEK 3.2 billion. In 2010, the economic situation stabilised and started a growth based on strong exports. In the fourth quarter of 2010, Estonian industrial output increased by 23% compared to the year before. The country has been experiencing economic growth ever since.
According to Eurostat data, Estonian PPS GDP per capita stood at 67% of the EU average in 2008.In March 2016, the average monthly gross salary in Estonia was €1105.
However, there are vast disparities in GDP between different areas of Estonia; currently, over half of the country's GDP is created in Tallinn. In 2008, the GDP per capita of Tallinn stood at 172% of the Estonian average, which makes the per capita GDP of Tallinn as high as 115% of the European Union average, exceeding the average levels of other counties.
The unemployment rate in March 2016 was 6.4%, which is below the EU average,while real GDP growth in 2011 was 8.0%, five times the euro-zone average. In 2012, Estonia remained the only euro member with a budget surplus, and with a national debt of only 6%, it is one of the least indebted countries in Europe.
Estonia's economy continues to benefit from a transparent government and policies that sustain a high level of economic freedom, ranking 6th globally and 2nd in Europe. The rule of law remains strongly buttressed and enforced by an independent and efficient judicial system. A simplified tax system with flat rates and low indirect taxation, openness to foreign investment, and a liberal trade regime have supported the resilient and well-functioning economy.The 2017 Ease of Doing Business Index by the World Bank Group places the country 12th in the world, surpassing neighbouring Finland, Australia, Germany, Canada and Switzerland. The strong focus on the IT sector has led to much faster, simpler and efficient public services where for example filing a tax return takes less than five minutes and 98% of banking transactions are conducted through the internet. Estonia has the third lowest business bribery risk in the world, according to TRACE Matrix.