Estonia will be first to catch up with West

By Mike Collier

HELSINKI - It will take another 20 years for living standards in the Baltic states to catch up with those in Western Europe, according to a new Finnish report.

Even though the economic gap between the EU15 member states and Eastern European countries continues to shrink, it will be 2028 before something close to parity is achieved, according to data produced by ETLA, the Research Institute of the Finnish Economy, for Sampo Bank and Danske Capital.

The study predicts that GDP per capita will rise from 36 percent to 87 percent of the EU15 average by 2050. GDP adjusted for purchasing power will increase nearly five-fold during the same period.

By 2050, the best income levels are predicted for the Baltic countries, along with Russia, Hungary and Slovenia.

Slovenia and the Czech Republic have already overtaken the poorest EU15 country, Portugal, in purchasing power.

According to the report Estonia will be the first to reach the current EU15 GDP level, achieving the mark in 2019. At the other end of the scale are the poorest Eastern European countries – Bosnia, Albania and Georgia – which will not reach the current level until the late 2030s.

“The results of the study support our view regarding the increasing importance of the Eastern European economies for all of Europe. However, many institutional investors have not yet fully woken up to the potential of Eastern Europe. In investment portfolios, Eastern Europe is still considered to be one of the minor emerging markets, whereas the region should really be treated as a significant part of a European portfolio," said Karri Alameri, Deputy Managing Director of Danske Capital.