Analytics, Economics, EU – Baltic States, Financial Services, GDP, Inflation

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According to the bank, Estonia's economic growth is to slow down mainly as a result of exports and investments decreasing more than expected. The growth of private consumption is still contributing to Estonia's economic growth, it can be seen from the bank's fresh Economic Outlook.

The outlook for 2016 and 2017 is more positive since foreign demand should improve, the bank said. Swedbank is expecting economic growth to total 2.6% in 2016 and 2.8% in 2017.

Business sector's investments have decreased already four quarters in a row and their contribution to the gross domestic product has fallen to the lowest level in the past 20 years, when not taking into account years 2009-2010.

For 2016-2017, the bank is expecting unemployment to grow because the need for workforce is declining. The number of jobs is to decline mainly in some sectors connected with exports where demand is low. The state reform is to reduce jobs in the public sector.

Salary increase is to remain high because finding qualified workforce is still a problem. It is also influenced by a 10-% growth in 2016 and 2017.

Inflation will be raised in 2016 and 2017 by a global increase in the prices of consumer commodities which will raise the price of motor fuels and heating in Estonia.

Consumer prices are expected to decline by 0.4% this year, but increase 1.6% in 2016 and 2.5% in 2017.

Unemployment rate is expected to total 6.6% this year, 6.9% next year and 6.9% in 2017.

The average net income is to increase 7.4% in 2015, 4.3% next year and 3.7% in 2017.

Swedbank, one of Lithuania's largest banks, is sticking to its Lithuanian GDP growth forecasts of 1.8% for this year, 3.3% for 2016 and 3% for 2017.

The latest growth projections for the three years are unchanged from those released by the bank in August.

"The upcoming general elections and expansionary fiscal policy, which will inject a significant amount of optimism and financial resources into the market through old-age pensions, higher minimum wages, a higher non-taxable personal income tax threshold and higher public sector salaries, will increase Lithuania's economic growth by around 1%age point," Swedbank's chief economist said on Tuesday.

"We will return to more moderate growth in 2017," Nerijus Maciulis said at a news conference.

According to him, the economy has successfully dealt with this year's challenges, but there are signs that the next five-year period "will not be easy" and that the next ten years may be "problematic".

Swedbank forecasts that unemployment in the country will amount to 9.3% this year and will ease to 8.1% next year.

The bank estimates that real net monthly wage growth will reach 5.5% this year before decelerating to 4.3% next year.

It expects that consumer price growth will be negative at minus 0.8% this year, but will accelerate to 2.5% in 2016.

The general government deficit is projected at 1% this year, 1.5% next year and 0.2% in 2017.

The bank forecasts that Lithuania's exports will decline by 3% this year, but will rise by 7% next year. Imports are expected to increase by 1% in 2015 and by 8% in 2016.