Central Bank Downgrades 2013 Economic Growth Forecast to 1%

The Bank of Estonia Photo: Õhtuleht/Scanpix
12/12/2013 2:04 PM
Category: Economy

With the books about to close on the current financial year, the Bank of Estonia has yet again lowered its prediction for 2013 GDP growth, putting it at just 1 percent.

The new 2013 figure is a full point lower than the 2 percent prediction the bank issued in June, while its forecast for 2014, now at 2.6 percent, is 1.6 percent more pessimistic.

In a statement today, the central bank said that the economic boost that had been expected from exports this year never fully materialized as growth in Estonia's main trading partner countries in the first half was more modest than predicted. What growth Estonia managed to achieve this year, it said, was based on domestic demand, driven mainly by higher household incomes and consumption.

The bank said, however, that it expects the export markets to continue to recover, which will lead Estonia to growth of 2.6 percent in 2014 and 3.9 percent in 2015.

Those predictions, if accurate, would put Estonia in a better position than the rest of the Eurozone, which is set to see relatively lackluster GDP rises of 1.1 percent and 1.5 percent for the next two years, according to a joint forecast by the zone's central banks.

Today's fresh forecast from the Bank of Estonia puts inflation at 2.9 percent and 2.1 percent for 2013 and 2014, and unemployment at 8.7 percent and 8.5 percent.

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