Tallinn - Estonia recorded a 15 per cent drop in quarterly
gross domestic product (GDP) on Wednesday, echoing similar plunges in
Latvia and Lithuania which one analyst described as 'nothing short of
horrific.'
Data released by the Estonian national statistics office showed
the economy shrank by 15.6 per cent in the first quarter of 2009
compared to the same quarter in 2008.
'The steep decrease of ... manufacturing, construction and retail
and wholesale trade influenced the decrease of GDP the most,' the
statistics office said.
The figures were worse than Lithuania's GDP fall of 12.6 per cent
for the first quarter but not as bad as Latvia's 18-per-cent
contraction, both announced earlier this week.
Most analysts had been expecting a fall of 12-13 per cent.
Estonian GDP has now decreased in four successive quarters.
According to Neil Shearing of Capital Economics, 'first quarter
GDP data for the Baltics are nothing short of horrific.
'While the worst of the financial crisis may have
passed, the recession in the real economy has further to run,' he
said.
The Estonian central bank reacted by saying the figures were in
line with its projection that the economy will shrink by 12.3 per
cent in 2009.
Estonia and the other Baltic states have been hit particularly
hard by the global economic downturn. A decade-long boom fuelled by
readily available credit came to an abrupt end when foreign-owned
banks tightened their lending criteria.
Nevertheless, the coalition government led by Prime Minister
Andrus Ansip insists that Estonia, a member of the European Union,
will adopt the euro as its national currency in 2011.
Unlike neighbouring Latvia, Estonia has not yet asked for a loan
from the International Monetary Fund (IMF), though a delegation from
the IMF is currently on a visit to the country and due to announce
its findings on May 18.
'Estonia and Lithuania may yet be forced to seek loans from a
super-sized IMF,' said Shearing.
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