Editing Economy of Estonia (section)

===2008 financial crisis, response and recovery===
[[File:Real GDP growth in Estonia, 2002-2012.png|thumb|300px|Real GDP growth in Estonia, 2002–2012.]]
The [[2008 financial crisis]] had a deep effect on the economy, primarily as a result of an investment and consumption slump, that followed the burst of the real estate market bubble that had been building up. In December 2008, Estonia became a donor country to the [[IMF]]-led rescue package for [[Latvia]]. In response to the crisis, the [[Andrus Ansip's second cabinet|Ansip government]] opted for fiscal consolidation and retrenchment by maintaining fiscal discipline and a balanced budget in combination with austerity packages: The government increased taxes, and reduced public spending by slashing expenditures and public salaries across the board.<ref name="Kattel_and_Raudla" />

After a long period of very high growth of GDP, the GDP of Estonia decreased. In the first quarter 2008, GDP grew only 0.1%, and then decreased: negative growth was −1.4% in the 2nd quarter, a little over −3% (on a year-to-year basis) in the 3rd quarter, and −9.4% in the 4th quarter of that year.<ref name="BBN_20090609">{{cite news |last=Tubalkain-Trell |first=Marge |title=Estonian Economy Fell 15.1 pct in Q1 |publisher=Baltic Business News |date=9 June 2009 |url=http://www.bbn.ee/?PublicationId=5e575e3c-7f5b-40c6-9a06-b3e53fb5d67b |access-date=21 August 2012 |archive-date=11 August 2014 |archive-url=https://web.archive.org/web/20140811214940/http://www.bbn.ee/?PublicationId=5e575e3c-7f5b-40c6-9a06-b3e53fb5d67b |url-status=dead }}</ref>

The government made a supplementary negative budget, which was passed by the [[Riigikogu]]. The revenue of the budget was decreased for 2008 by EEK 6.1 billion and the expenditure by EEK 3.2 billion.<ref>{{cite web |title=Government approves supplementary budget for 2008 |publisher=[[Ministry of Finance (Estonia)|Ministry of Finance of the Republic of Estonia]] |date=15 May 2008 |url=http://www.fin.ee/?id=80290 |access-date=21 August 2012}}</ref> A current account-deficit was extant, but began to shrink in late 2008. In 2009, the economy further contracted by 15% in the first quarter.<ref name="BBN_20090609" /> Low domestic and foreign demand depressed the economy's overall output.<ref name="reuters-2009-06-09">{{cite news |last=Mardiste |first=David |title=Estonian Economy Contracts Sharply in First Quarter |agency=[[Reuters]] |date=9 June 2009 |url= http://www.forexpros.com/news/forex-news/estonian-economy-contracts-sharply-in-first-quarter-61196 |access-date=21 August 2012}}</ref> The economy's 34% industrial production drop was the sharpest decrease in industrial production in the [[European Union]].<ref>{{cite news |last=Tubalkain-Trell |first=Marge |title=Estonian Industrial Production Fell Most in EU |publisher=Baltic Business News |date=12 June 2009 |url=http://www.bbn.ee/?PublicationId=3259772f-4391-4a3a-92d7-fa7eb18f6a02 |access-date=21 August 2012 |archive-date=11 August 2014 |archive-url=https://web.archive.org/web/20140811214951/http://www.bbn.ee/?PublicationId=3259772f-4391-4a3a-92d7-fa7eb18f6a02 |url-status=dead }}</ref> Estonia was one of the five worst-performing economies in the world in terms of annual growth,<ref>{{cite web |title=Country Comparison – National product real growth rate |work=The World Factbook |publisher=CIA |date=2009 |url=https://www.cia.gov/library/publications/the-world-factbook/rankorder/2003rank.html?countryName=Estonia&countryCode=en&regionCode=eu&rank=209#en |access-date=26 April 2010 |archive-date=7 July 2014 |archive-url=https://web.archive.org/web/20140707082719/https://www.cia.gov/library/publications/the-world-factbook/rankorder/2003rank.html?countryName=Estonia&countryCode=en&regionCode=eu&rank=209#en |url-status=dead }}</ref> and had one of the hightest rates of unemployment in the EU, which rose from 4% in May 2008 to 16% in May 2009.<ref>{{cite magazine |last=Zumbrun |first=Joshua |title=In Pictures: The World's Hardest-Hit Economies |magazine=[[Forbes]] |url= https://www.forbes.com/2009/07/08/economics-iceland-ireland-business-beltway-countries_slide_4.html |date=2009-07-08}}</ref>

In July 2009, the [[value-added tax]] was increased from 18% to 20%.<ref>{{cite news |last=Tubalkain-Trell |first=Marge |title=MPs approve plan to increase VAT rate to 20 pct |publisher=Baltic Business News |date=18 June 2009 |url= http://bbn.ee/?PublicationId=87f66124-06d2-4a65-bc7b-49ccc6d69dfc |access-date=21 August 2012}}</ref> The recorded budget deficit for 2009 was just 1.7% of GDP.<ref name="Kattel_and_Raudla">{{Citation |last1=Kattel |first1=Rainer |last2=Raudla |first2=Ringa |title=Why Did Estonia Choose Fiscal Retrenchment after the 2008 Crisis? |work=Journal of Public Policy |date=August 2011 |url= https://www.researchgate.net/publication/231828912 |access-date=2019-02-09}}</ref> The result was, that Estonia was one of only five EU countries in 2009 that met the Maastricht criteria for debt and deficit, and had the third-lowest deficit after Luxembourg and Sweden; Estonia did not ask for support from the [[International Monetary Fund|IMF]]. Despite the third-largest drop in GDP, the country had the lowest budget deficit and lowest public debt among Central and Eastern European countries. In 2009, the Estonian economy began to rebound, and economic growth resumed in the second half of 2010. The country's unemployment rate dropped significantly to pre-recession levels.<ref name="stat_unemployment">{{cite web |title=Töötuse määr |language=et |trans-title=Unemployment rate |publisher=Statistics Estonia |year=2019 |url=https://www.stat.ee/stat-tootuse-maar |access-date=2019-02-09 |archive-date=9 February 2019 |archive-url=https://web.archive.org/web/20190209182011/https://www.stat.ee/stat-tootuse-maar |url-status=dead }}</ref> To top it off, Estonia was granted permission in 2010 to join the eurozone in 2011.<ref name="Kattel_and_Raudla" />