Estonia Sharply Cuts 2009 GDP Outlook To Show Severe Contraction

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Thursday, Estonia's Finance Ministry reportedly said its economy is likely to shrink 14.5% this year, much sharper than an 8.5% contraction forecast in March.

In the second quarter, Estonia's real gross domestic product or GDP decreased 16.6% compared to the same period a year ago. Sequentially, the seasonally adjusted real GDP fell 3.7%.

On Wednesday, Estonia's central bank said economic contraction in the country started to ease in the second quarter and economic developments in the first half of the year were broadly in line with Eesti Pank's spring forecast.

The ministry also forecast that consumer prices would fall 0.1% this year. That compares with an earlier prediction of a 0.4% growth.

The ministry forecast budget deficit to range between 3.2% and 4.2% of GDP this year, above the maximum deficit of 3% of GDP allowed for euro adoption under the Maastricht criteria. The country may need more budget cuts to reach the target.

Thursday, Estonia's Finance Ministry reportedly said its economy is likely to shrink 14.5% this year, much sharper than an 8.5% contraction forecast in March. (Market News Provided by RTTNews)