5/23/2008

Slowing down

The long years of growth in Estonia may be over

Estonia's economy is slowing sharply; after several years of GDP growth at or close to 10%, the rate of expansion this year will be very slow and could even be negative. The property downturn and a decisive change in consumer sentiment are the main reasons behind the decline. More worryingly, with the easy gains of catch-up now exhausted and demographic factors counting against the country, the economy is unlikely ever to return to the high growth rates recorded in recent years.

The sharp slowdown in the Estonian economy that began in 2007 is now undeniable. In every year since 2000, Estonia has posted GDP growth in excess of 7%. In 2005 and 2006, growth was running at double-digit rates. It remained there in the first quarter of 2007 but thereafter has slowed markedly. The fourth-quarter outturn was just 4.8%, bringing full-year growth down to 7.1%. According to the official flash estimate, growth in the first quarter of 2008 was just 0.4% year on year, with the level of output, after seasonal adjustment, falling between the fourth quarter of 2007 and the first quarter of 2008. ...



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[Source: The Economist: News analysis - Posted by FreeAutoBlogger]

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