Macroeconomic performance and buffers were strong when the COVID-19 pandemic hit. Economic and social restrictions instituted in March 2020 helped slow new infections and mitigate negative health outcomes but triggered a deep decline in activity in Q2:2020. The slump was followed by a strong rebound in Q3 as the restrictions were eased. With the resurgence of the virus, pressures on the health system peaked in late-March 2021 and eased after a new round of restrictions. Going forward, the outlook is for a near-term economic recovery subject to large two-way risks. The strength and durability of the recovery hinges on the evolution of the health situation and the extent of economic scarring from the pandemic.
Emmanouil Kitsios, João Tovar Jalles, and Ms. Genevieve Verdier
How can governments reduce the prevalence of cross-border tax fraud? This paper argues that the use of digital technologies offers an opportunity to reduce fraud and increase government revenue. Using data on intra-EU and world trade transactions, we present evidence that (i) cross-border trade tax fraud is non-trivial and prevalent in many countries; (ii) such fraud can be alleviated by the use of digital technologies at the border; and (iii) potential revenue gains of digitalization from reducing trade fraud could be substantial. Halving the distance to the digitalization frontier could raise revenues by over 1.5 percent of GDP in low-income developing countries.
This 2019 Article IV Consultation with Estonia discusses that the outlook is favorable for the near term, however, for slower economic activity for the medium term. Th economy has performed well in recent years, supported by prudent management and effective structural reforms. Growth remains strong and unemployment is at a record low. Inflation is above the euro-area average, consistent with Estonia’s convergence process. Wages are rising, reflecting a tight labor market and skill shortages at the high end of the labor market. Absent reforms to boost productivity and manage demographic challenges, however, growth will slow notably. The authorities need to guard against potential overheating in the near term while taking advantage of sizable fiscal buffers in the medium term to support innovation and labor supply and reduce inequality. The report recommends that it is imperative to consider changes that preserve the pension system’s viability and sustainability, while promoting policies that address inequality. This includes raising female labor participation through broader implementation of gender pay transparency and flexible childcare arrangements.
We undertake an extended discussion of the latest developments about the existing and new estimation methods of the shadow economy. New results on the shadow economy for 158 countries all over the world are presented over 1991 to 2015. Strengths and weaknesses of these methods are assessed and a critical comparison and evaluation of the methods is carried out. The average size of the shadow economy of the 158 countries over 1991 to 2015 is 31.9 percent. The largest ones are Zimbabwe with 60.6 percent, and Bolivia with 62.3 percent of GDP. The lowest ones are Austria with 8.9 percent, and Switzerland with 7.2 percent. The new methods, especially the new macro method, Currency Demand Approach (CDA) and Multiple Indicators Multiple Causes (MIMIC) in a structured hybrid-model based estimation procedure, are promising approaches from an econometric standpoint, alongside some new micro estimates. These estimations come quite close to others used by statistical offices or based on surveys.
Cornelia Hammer, Ms. Diane C Kostroch, and Mr. Gabriel Quiros-Romero
Big data are part of a paradigm shift that is significantly transforming statistical agencies, processes, and data analysis. While administrative and satellite data are already well established, the statistical community is now experimenting with structured and unstructured human-sourced, process-mediated, and machine-generated big data. The proposed SDN sets out a typology of big data for statistics and highlights that opportunities to exploit big data for official statistics will vary across countries and statistical domains. To illustrate the former, examples from a diverse set of countries are presented. To provide a balanced assessment on big data, the proposed SDN also discusses the key challenges that come with proprietary data from the private sector with regard to accessibility, representativeness, and sustainability. It concludes by discussing the implications for the statistical community going forward.
This 2017 Article IV Consultation highlights that the economy of Lithuania has been gathering momentum, following sluggish performance in 2015 and most of 2016. Real GDP expanded by 3.9 percent in the first quarter of 2017 after rising by 2.3 percent in 2016. Strong private consumption, on the back of robust wage growth and low inflation that supported purchasing power, has long been a main driver of growth. Building on recent momentum, economic growth should be strong in 2017, rising to 3.2 percent. Improving external conditions and a turnaround in European funds absorption, as well as high capacity utilization, should spur exports and investment.
This 2016 Article IV Consultation highlights that Estonia’s recent growth has been subdued. Labor productivity and external competitiveness have weakened. Growth in 2016 is estimated at only 1.3 percent, driven mainly by private consumption on the back of strong wage growth in a tightening labor market. Exports are gradually recovering, but investment continues to contract. Import growth is accordingly low, keeping the current account in small surplus. Inflation rose moderately to about 1 percent. The economy should gradually strengthen going forward, as the external environment improves and existing pro-growth policies come to fruition. Growth is projected at 2.3 percent and 2.8 percent for 2017 and 2018, respectively.
This 2015 Article IV Consultation highlights that Estonia’s economic growth has slowed following the rebound from the deep recession in 2009. Although Estonia’s economic and institutional fundamentals are among the strongest in the region, the economy is expected to expand by only a modest 1.6 percent in 2015. Growth is primarily driven by private consumption, which benefits from strong wage growth as labor market slack diminishes for demographic reasons. The economy should gather speed going forward. Growth is projected at 2.5 percent for 2016 and should average about 3 percent over the next few years.