TALLINN - Eesti Pank issued a press statement August 14th which maintained a sanguine view of the coutry's economic prospects. Even though Estonia has technically entered a recession, Andres Saarniit, Adviser to theEconomics Department of Eesti Pank did not seem unduly concerned.
"The volume of theEstonian economy was 1.4% smaller year-on-year in the second quarterof 2008. Compared with spring, the global economic growth outlook hasworsened with growth indicators being volatile. In this context, itis logical that there occurred no pivotal changes in economic growthin the second quarter in Estonia. Only a sharp improvement in exportopportunities would have been able to make up for the expectedweakening of domestic demand against the backdrop of last year'srapid growth," Saarniit said.
He added that the economic downturn was caused by thecontinued decline in domestic demand, while the global economic outlook will not be conducive to a noticeablepick-up in Estonia's exports any time soon.
"Looking at the spring forecast of EestiPank it can be said the economy is following the scenario whichexpected a fast decline in domestic demand at the beginning of 2008and a re-acceleration of growth during 2009," Saarniit concluded.