Finance Ministry Lowers GDP Forecast to 1.7%
Minister of Finance Jürgen Ligi announced today that his ministry is predicting a 1.7 percent growth in the nation's economy this year, down from the 3 percent it had forecast last fall.
Though the ministry's official forecast is not due to be published until next week, Ligi released the figure at the weekly Cabinet press conference on Thursday, uudised.err.ee reported.
"Considering the recent bleak outlooks, you could have feared worse," he said.
"The main reason we lowered the prognosis from 3 percent to 1.7 percent was the European economy, including the Swedish economy, where many forecasters such as Nordea are already predicting a recession," he said, noting troubles in the Swedish economy in particular were expected to impact Estonia's export figures.
Ligi said, however, that domestic demand was picking up.
The Finance Ministry's new GDP number puts its outlook more in line with those of other institutions, who have in recent months also lowered their expectations of the country's 2012 economic performance for more or less the same reasons.
In December, the Bank of Estonia estimated that the figure would come in at 1.9 percent, while Swedbank gave a more positive estimate of 2.7 percent a month later. Earlier this month, Ernst & Young put its forecast at 2 percent.
Against the advice of the Bank of Estonia, the government put together this year's state budget, which foresees a 2.1 percent deficit, based on the ministry's earlier 3 percent growth forecast. Prime Minister Andrus Ansip said that the government was prepared to make further cuts if necessary.
Steve Roman