Macroeconomic Forecast Estonia

The recession in Estonia continued apace in Q309, with real GDP contracting by 15.6% y-o-y, a marginal improvement from the 16.1% decline recorded in Q209. This was the seventh consecutive quarter in which the Estonian economy contracted in y-o-y terms, and brought the total decline in January-September to 15.6% y-o-y. Especially worrying is that there have been no signs of a tentative recovery in Estonia as yet, despite the fact that several other major emerging European economies, including Poland, Russia and Turkey, showed marked improvements in the third quarter. As a result of the latest data, we have revised down our 2009 growth forecast to -14.5% (from -14.0%), and hold to our expectation for a 1.2% contraction in 2010.

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