Analytics, Economics, Estonia

"We suspect that the recession will soon spread from manufacturing to engulf the region's entire economy," he said.

The rout was led by news that the Estonian economy contracted by nearly one-tenth in the final quarter of 2008, according to a provisional estimate released Friday by the small Baltic state's official statistics bureau, Eesti Statistika.

"Gross domestic product (GDP) decreased by 9.4 per cent in Estonia in the 4th quarter of 2008 compared to the same quarter in the previous year," Eesti Statistika said.

The news confirmed that the Estonian economy shrank for three consecutive quarters after the former "Baltic Tiger" became the European Union's first member state to slip into recession in 2008, writes LETA.

"A steep decrease in ... the economic activities of the industrial sector, especially of manufacturing, had a substantial impact on the decrease of GDP.

"The decrease in manufacturing was caused by a continually small domestic demand and, by virtue of that, a decrease in orders," Eesti Statistika outlined.

Figures for the third quarter showed a 3.5% drop.

More worrying than the fact that the economy continues to contract was the sheer scale of the drop, which was far steeper than most economists had predicted.