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Additional stimulus of govt would be dangerous for Estonian economy
BC, Tallinn, 13.12.2016.
Print version
Print versionAccording to Governor of the Bank of Estonia Ardo Hansson, the additional stimulus of the government could have a short-term boosting effect on the economy, but in the long run it would reduce investments and the competitive ability of the government, reports LETA/BNS.
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The extra stimulus of the government could boost the economy for a short period, but in the long run it would reduce the Estonian economy's competitive ability by hindering the normalization of the growth of labor costs, therefore slowing down companies' investments, Hansson said at the presentation of the central bank's fresh economic forecast.
According to Hansson the state budget is moving toward a structural and nominal budgetary deficit in the next few years.
The Bank of Estonia said on Tuesday it has cut Estonia's economic growth forecast for 2016 by 0.8 ppt to 1%. The bank estimates Estonia's GDP growth to total 2.6%t next year, 0.3 ppt less than in its June forecast, while in 2018 it is to still total 3%.
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