Analytics, Economics, Estonia

Maris Lauri.

She added that expectations on Estonia"s, Latvia"s and Lithuania"s economies have deteriorated significantly.

"The November economic indicators have brought down the hopes of even the few who dreamed of the global economic crisis turning out a bad dream and hoped that the reality will only mean slightly worse developments than usually experienced," she noted.

Lauri estimated that the economic processes might start improving at the end of the year 2010, the economic growth might remain between 0.5-3%.

More optimistic outlook on the year 2010 is based on a number of premises: firstly, foreign direct investments may start growing from the second half of the year 2009, as the declining price of assets will make them attractive for investors. Decline in pay and increase in the unemployment rate should be the factors that would increase the attractiveness of Estonia for moving manufacturing operations.

The second factor is funding from different EU funds. Lauri noted that in this regard, the Government needs to be ready to guarantee co-financing.

The third factor which will have a negative impact on the economic developments, but has a very strong impact, is foreign financing through banks. Hansabank Markets is very sceptical in this regard and its outlook is based on the premise that banks in Estonia have to rely almost completely on domestic resources.