Taavi Raudsaar, Economist at Eesti Pank, 18.10.2016
• Corporate debt liabilities remained at the same level as last year despite the rapid growth in bank loans
• The income and savings of households are still increasing faster than their debt liabilities
• As before, more financial assets were invested abroad or returned there than were taken in from abroad
Corporate borrowing from banks operating in Estonia has increased, while borrowing from abroad has declined. The stock of loans taken from banks operating in Estonia was 7% larger at the end of the first quarter than a year previously and stood at around 39% of all corporate debt liabilities. The amount taken in loans from abroad or issued as bonds abroad shrank by 4% at the same time. One cause of the increase in the share of domestic bank loans is good corporate access to such loans. Furthermore, investment and borrowing have been lower in recent years than previously in those sectors, primarily energy and transport, where a large part of borrowing is from abroad. Total corporate debt liabilities in the second quarter were 18.2 billion euros, or about the same as a year earlier.

Growth in household loans has become faster, but it is still a little behind the growth in incomes and savings. The volume of household loan liabilities was 5.8% larger at the end of the second quarter than a year ago. There has also been an increase in the take up of housing loans, car leases and consumption loans. The cash and deposits of households was a little over 7% larger in volume at the same time, mainly because of continuing rapid growth in wages.

Despite some growth in investment in the second quarter, Estonian households, companies and general government saved more in the second quarter than they invested, and so the Estonian economy as a whole was a net lender to the rest of the world. This means that as in the past six years, more funds were invested abroad than were taken in from there. This is reflected in the improvement in the indicators for external debt and the international investment position.

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