Analytics, Economics, Estonia, Financial Services

The Bank of Estonia also drafted a risk scenario, according to which the State's economic decline will be 15.3%. According to a more optimistic scenario, the economic decline would be 8.4%.

In the beginning of the year, the central bank predicted that the economic decline would be only 5.5% and the risk scenario estimated that the economic decline would be 8.9%.

The Bank of Estonia explains the new, much more negative outlook with the fact that the economic outlooks of Estonia's main trade partners have also been adjusted downwards. While earlier, it was expected that their economies would fall by 3%, now it is expected that their GDP would fall by 4%.

The central bank estimated that an economic decline of 12% in Estonia would mean that the State budget volume should be cut by another 6 billion kroons this year. Unless the Government will be able to do it, Estonia would not fulfil the requirement of keeping the budget deficit below 3% which is needed for Estonia to be able to accede to the euro.

The Bank of Estonia predicted that next year the economic growth will be 0.2%.