Analytics, Economics, Estonia, Financial Services

"This are alarming news for the Estonian economy; developments of the next two months are of greatest importance," said investment analyst and founder of Tarkinvestor.ee Kristjan Lepik.

Lepik said that the worst outcome for Estonia would be if the governments fail to contain the US financial crisis and it would trigger a global slowdown.

"It would put Estonian economy under great pressure," he said.

Erki Kert, the head of analysis department of investment bank LHV, says that the US crisis is clearly slowing down the recovery of Baltic economies: "For Estonian businessmen the current meltdown of world money markets means less access to cheap money. Estonia will also be affected by the impact that the crisis has on Europe."

Peeter Koppel, private banking strategist of SEB, said that the positive news is that base rates could come down since politicians understand that this is the only way to restore confidence in the financial system in Europe and US.

Since the full impact of the US financial crisis is still to hit Europe, analysts believe that much will depend on what happens in Europe in the next couple of weeks.

Andres Sutt, vice president of the Bank of Estonia, said that Estonia has a strong financial system and that short-term fluctuations should not be exaggerated.

"The financial situation of our banking system is strong, banks have good equity, high profits and should overcome these temporary setbacks," Sutt said.