EE: IMF ups Estonias GDP growth in 2011 to 3.7%.

By bne IntelliNews December 14, 2010
IMF increased its forecast for GDP growth for Estonia in 2011 to 3.7% vs. 3.5% from its previous autumn outlook. For this year, IMF sees 1.8% economic growth. Outlook for Estonias economy remains positive, with main risks being global inflationary risks, uneven recovery of main trading partners and budget spending pressures. Inflation that hit 5% in October is expected to increase in 2011 on global food and fuel prices, even despite the effect of the administered prices increase will decline. IMF also urges close monitoring of profitability and competitiveness, given recent wage increase, still high unemployment and price and costs risks. Recovery being direct-trade driven, high unemployment could cause a new wave of bad loans growth, the fund believes. To remind, in its latest autumn economic outlook EC raised its GDP forecast for Estonia for 2010 to 2.4% y/y. In 2011 and 2012 economic growth is seen at 4.4% and 3.5%, respectively. EC notes, however, that Estonias long-term growth potential and production capacity will be lower than the pre-crisis levels. EC sees unemployment at high 17.5% in 2010, 15.1% in 2011 and 13.6% in 2012, while inflation is forecasted at 2.7%, 3.6% and 2.3% in 2010, 2011 and 2012, respectively. In September Bank of Estonia revised its GDP growth forecast upwards to 2.5% in 2010 and 4.2% in 2011, as compared to April's forecast of 1% and 4% growth, respectively. Central bank attributed the revision to faster-than-expected economic growth of the main trading partners in H1/10 that facilitates Estonia's economic recovery. CB's GDP growth forecast is more optimistic of that of FinMin, which stands at 2% and 3.6% for 2010 and 2011, respectively.

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