Macroeconomic Forecast Estonia

The retail sales index in Estonia posted strong growth in November, coming in at 5.2% y-o-y. This further lends credence to our view for a strong showing from this sub-component of real GDP. We expect private consumption to have increase by 4.2% in 2011. However, the trend points towards an ongoing moderation in retail sales growth, with November's figure below the 7.4% y-o-y growth in the index witnessed in August. We forecast private consumption growth to fall to a still relatively strong 3.1% in 2012, aided by strong base effects.

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