Minister: Economy more likely to be in slow-down, rather than recession

Minister of Finance Keit Pentus-Rosimannus (Reform).
Minister of Finance Keit Pentus-Rosimannus (Reform). Source: Ken Mürk/ERR

Thanks to rapid recovery from the Covid crisis, an economic slowdown, rather than an all-out recession, is likely to be the outcome of Russia's invasion of Ukraine as regards the Estonian economy, finance minister Keit Pentus-Rosimannus (Reform) says.

At the same time, not all the effects of Russia's war, one month after it started, have become apparent yet, Pentus-Rosimannus went on.

Uncertainty in the economy is high right now, an effect seen across the whole of Europe, the minister said. "The situation is such that it is virtually impossible, for everyone, to predict exactly what sort of world we will be living in come the autumn," Pentus-Rosimannus said.

It is still too early to comment on the planned supplementary budget, as additional requirements have not yet been calculated, she added.

She said: "We will probably be able to talk about a more specific financial framework at the end of March, when hopefully all the affected areas have been forecast and we will be able to talk about what needs to be included in this year's supplementary budget."

Loan money was planned for the supplementary budget which, the minister said, will exert no negative effects on Estonia's creditworthiness, as things stand.

The minister added that while no cuts were planned, some projects may be behind schedule, due to higher construction costs.

While a slowdown in the economy can be expected this year, this does not mean a definite recession, she said, largely due to the momentum resulting from the exit from the coronavirus crisis, which saw growth in most sectors and a more buoyant employment situation.

"The current situation did not hit us at the most fragile moment," she added.

The ministry's spring forecast is due to be finalized in April, though is something of a moving target given all the uncertainty, Pentus-Rosimannus said.  "Not all of the consequences of Putin's war have yet entered the economy by any stretch, but times will be difficult, and economically volatile."


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Editor: Andrew Whyte

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