Estonia's economy to grow sluggishly for years
08.02.2010, 09:49Estonian economic growth may remain subdued for several years as government austerity measures to prepare for euro adoption undercut domestic demand, but the probability of Estonia adopting the euro in January is high, Moody’s said last week.
Bloomberg quoted Kenneth Orchard, an analyst with Moody’s, saying that recent economic data suggest that Estonia is at the end of its deep and painful economic adjustment.
"Domestic demand may remain weak as the government’s austerity program, aimed to help qualify for euro adoption in 2011, dampens demand. The economy may need several years to return “to a more robust condition. Although we expect the economy to start expanding again in second half 2010, growth is forecast to be subdued for some time," said Moody's
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Estonia seeks to become the third eastern European country to join the euro region after Slovenia and Slovakia. Prime Minister Andrus Ansip has cut the budget deficit by 9% of gross domestic product to meet the terms of the switchover. The economy contracted 15.6% in the third quarter, marking the second-deepest recession in the European Union.