Hansson: Estonian economy's position is good, eurozone risks big

Photo: Peeter Langovits

The Estonian economy is balanced now and the state of affairs in all the Baltic countries is good compared to the rest of Europe, yet the risks arising from the eurozone crisis remain, Bank of Estonia governor Ardo Hansson said on Thursday.

Speaking at a conference organized by Danske Bank, Hansson said his recommendation for entrepreneurs harboring thoughts of growth was to have "a sober attitude, even moderate optimism." "It definitely pays to encourage entrepreneurs that have a good balance sheet and are active in a growing sphere of activity, because money is cheap and labor costs still in line with productivity," Hansson said.

If the business does not have a sound balance sheet, one first of all needs to beef up the liquidity buffers, the governor of the central bank said.

The biggest threat for the euro area now is fragmentation of the financial markets, he said. "Financing conditions -- the price of money -- is different in different regions. It's cheaper in countries with a stronger economic policy and more expensive in countries with a weaker economic policy," said Hansson. "At the same time, the danger that the euro area will collapse has decreased in recent months."

The second challenge is slow economic growth and the question how to encourage investment, Hansson added.