Largest Banks Slash Economic Forecasts ({{commentsTotal}})

Source: Photo: Postimees/Scanpix

Both SEB and Swedbank have cut their expectations for the nation's economic growth by about half from spring estimates.

SEB has downgraded its 2013 GDP growth estimates from 3.3 percent to 1.5 percent, forecasting 3.3 for next year and 3.5 percent growth for 2015.

Estonia's largest bank, Swedbank, also forecast a 3.3 percent growth for the current year in spring, but today announced that it has cut that estimate to 1.9 percent. It remains more optimistic than SEB about the future as well, predicting a 3.9 and 4.2 percent growth for the next two years.

“Recovery in the Eurozone is sluggish and is holding back Estonian economic growth. Latvia and Lithuania are the more successful export locations for Estonian businesses currently, as the fact that they are about to join the Eurozone has positively effected their economic growth,” SEB analyst Ruta Arumäe said.

Swedbank said the economy has stalled due to weaker internal demand and fewer investments, and warned that forecasts for the next two years could be further downgraded if other nations recover slower than hoped.

Estonia's gross domestic product grew by only 1.3 percent in the second quarter of 2013 compared to the same period last year.