Baltic economies continue freefall

Estoniahas so far been hit the hardest as it became the first country in Eastern Europe to dip into a recession following years of high growth driven by credit. The country registered negative GDP alongside a double digit inflation rate.

"The decrease in the GDP was mostly influenced by the weak domestic demand and at the same time by the decrease in exports of goods and services," the national Estonian statistics service said in a report on the country's GDP growth.

Estonia's inflation rate remained in the double digits in August at 11 percent. The statistics agency said a 17.1 percent increase in food prices was a main contributor to the still high inflation rate.

The numbers reflect the Baltic states' continued fall into a widely predicted economic hard landing.

Latvia's inflation, meanwhile, fell for the third straight month in August but remained 15.7 percent, the highest in the Baltics. Inflationary data is not yet available for Bulgaria- which boasted the second highest rate in the EU in July at 14.5 percent - and so it is not yet clear whether Latviastill has the highest inflation rate in the bloc.

"Price decrease of vegetables and fuel, as well as price increase of clothing, catering services and housing rent had the greatest impact on consumer price changes in August," the Latvian national statistics office said in its report.

The country's GDP growth barely remained positive in the second quarter at only 0.1 percent higher than the same period in 2007. Many analysts predict that the trend will continue and the country will see negative GDP growth by the end of the year.

Lithuaniahas so far suffered the softest economic landing of the three Baltic states. The country's average annual inflation rate in August hit 10.3 percent, while year-on-year GDP growth in the second quarter stayed at 5.3 percent.