Vahtras says recovery will take time as consumers turn cautious

Economic recovery will take time to reach households, Economy and Industry Minister Liina Vahtras told ERR, as a new survey showed business confidence improving while consumers became more pessimistic in October.

Statistics Estonia’s confidence surveys found that businesses’ assessments of current conditions and future prospects have improved for some time. The Ministry of Economic Affairs and Communications said October’s results were not a surprise, and that the industrial sector was in its strongest position in four years.

“The economy’s recovery and improvement take a little longer; they do not happen overnight,” Vahtras said. She added that people would feel the benefits of the income tax reform introduced at the start of the year later.

Ministry chief analyst Mario Lambing said consumer confidence had fallen to its lowest level in six months. Vahtras said high fuel prices and the approaching heating season had made people more cautious about the future. If winter is colder and heating bills rise, the government will discuss how to compensate households and businesses, she said.

Since May, Statistics Estonia has conducted the confidence surveys in place of the Institute of Economic Research. Lambing said the change of interviewer may have affected consumer responses, but suggested that switching from telephone interviews to online surveys could have had a greater impact. The two methods can produce different results even when the same people are asked the same questions.