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Estonia has a population of 1.3 million. It belongs to the group of high-income countries. It has been a EU member since 2004 and joined the Eurozone in 2011.

As a small open economy, Estonia is exposed to shocks, such as in 2008. Eurozone membership has completely eliminated currency risk and helped the country to attract structural investment inflows. Estonia has a long track record of strict budget orthodoxy which was not jeopardized by Covid related fiscal stimulus, and public debt is still low. Stronger inflation compared to the Eurozone can be a threat as it may erode competitiveness. Exposure to shocks is also related to the size of the financial sector.