TALLINN - Tallinn Mayor Edgar Savisaar lashed out at the government for what he said were egregious economic failures, saying that gross domestic product would grow by only 2 's 3 percent in 2008.
Speaking at a Dec. 15 meeting of the Center Party, which he chairs, Savisaar said the economy was falling and that the worst was yet to come. In his words, 2008 was gearing up to be the most difficult year for Estonia's economy since the country gained its independence in 1991.
"Right now the forecast for economic growth next year is 4 - 5 percent, but in reality it will barely reach 2 - 3 percent," Savisaar was quoted as saying by the Center Party's press service.
According to a preliminary estimate, third quarter GDP growth was 6.4 percent, down from 7.3 percent in the second quarter.
He said inflation would continue to increase and hit double-digit territory next year, which will be a disgrace for the government, which, in his opinion, has failed to undertake any measures to reverse the trend.
Annual growth of consumer prices in Estonia was 9.1 percent in November, while prices for the month alone shot upward 1.4 percent.
Prime Minister Andrus Ansip, who headed the previous government coalition that included the Center Party, responded immediately. In an interview with SL Ohtuleht, he said that the slower rate of growth was welcomed and talk about a contracting economy was plain wrong.
"The economy grew rapidly. A slowdown in the growth rate was inevitable, and we spoke about this," he said. "When economic growth was 11 percent, then everyone blamed the government for not doing anything to prevent an overheating."
He said the current GDP growth rate of 6.4 percent was one of the highest in the EU and therefore any statements that the economy was contracting were incorrect. "If during a crisis the unemployment rate is 4.2 percent, then I'll dare say that I don't mind living in such a crisis," Ansip said.
"Businessmen have put too much focus on macroeconomic problems. They should think more about their companies," he said, adding that wages and salaries have been rising faster than productivity and this was undermining Estonian businesses' competitiveness. "Every businessman should think what will happen after salaries rise 20 - 30 percent" and how to remain competitive, the prime minister said.