Analytics, Economics, Estonia

The Bank of Estonia experts claim that currently economic situation is difficult to forecast. However, many experts think that the situation could become more unfavourable for Estonia this year.

Foreign demand may partially recover in 2010, but the new growth will likely not be fast and depends on the state's ability of adapting to the new environment. Lower interest rates and other stimuli help the world to recover from the difficulties.

The Estonian central bank forecasts that the decreasing external demand could bring the actual capacity of Estonian economy to a minus with a 5.5% decrease. According to a more depressing scenario the main trading parties' economic growth might decrease into a minus by 3%, which as a result would add up to a nine% decrease for the Estonian economy.

Estonian Central Bank named secure banking system, flexible business environment and labour market and reserves as fundamentals for the new growth. The main assumptions for new investments are the tax system's stability and reliability of state finances.