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Estonia’s Rating for Investments

Updated on Tuesday 02nd June 2015

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When choosing a country to invest in, it would be advisable for entrepreneurs to take into consideration the rating for investments for that specific country.  Credit ratings are indicators mean to show the stability, credibility and opportunities for investments of a country or company. The sovereign credit rating analyzes a country’s risk level for the investment environment. Basically it is an evaluation of the country’s ability to pay back its debt and it takes into consideration various factors such as currency stability, GDP, political prudency and many others.

 

There are several agencies that publish a credit rating report on an annual basis, which contains an overlook of the investments environment for each country. The most renowned rating agencies are Standard & Poor’s, Moody’s and Fitch. S&P announced in January 2014 they will keep Estonia’s AA- long-term government bond rating, which is the fourth-highest investment grade. This means   the country has very strong capacity to meet its financial commitments. The reason for awarding Estonia with this rating is that “The ratings are supported by our view of Estonia’s stable political environment, prudent government finances, and highly adaptable economy. We expect Estonia’s growth to improve this year and to average more than 3 percent annually in 2014-2017”. Moody’s Investors Service and Fitch Ratings rate Estonia as the fifth-highest investment grade.

 

Until the global financial crisis in 2008, Estonia had one of the most fast-growing economies in Europe. In 1991 it became an independent capitalist economy. It was the first country to adopt a flat tax of 26% in 1994. Between 2005 and 2008, the Estonian personal income tax rate was reduced from 26% to 21%. In the second half of the 1990s, Estonia received more foreign investment per capita than any other country in Central and Eastern Europe.

 

The financial crisis was a major hit at that time for the country that registered a decrease in investments and an increase in the unemployment rate up to 15,6% in 2009.  However the economy showed improvement signs after 2010 and in 2011 the country adopted the Euro as currency. In 2013 Estonia was ranked 21th on the Ease of doing Business Index made by the World Bank Group.

 

Long-term prospects for the Estonian economy remain among the most promising in Europe. The number of entrepreneurs decided to open a company in Estonia have considerably increased in the past two years. According to a survey of CEPII, by 2025 its GDP per capita could rise to the level of Nordic economies and by 2050, Estonia could become the most productive country in the EU, after Luxembourg,

 

Please contact our company formation specialists in Estonia in order to find out more information about setting up a business here and the types of companies that can be established.

 

 

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