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Country Forecast Estonia Updater

  • ID: 2123782
  • Country Profile
  • July 2012
  • Region: Estonia
  • 17 Pages
  • The Economist Intelligence Unit
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The centre-right coalition, comprising the Reform Party and the Pro Patria-Res Publica Union (IRL), holds a comfortable majority in parliament and is expected to remain in power until the next election, in 2015. Political relations with Russia will remain tense, having an adverse impact on the Estonian oil transit business. The budget deficit is expected to be below 3% of GDP in 2012-14, before returning to surplus in 2015. A renewed real GDP contraction in the euro zone (of 0.7%) in 2012 means that growth will slow sharply in Estonia, to 2.1%. Growth will recover to a modest annual average, of 3.5% per year in 2013-16. After easing in 2012-13, inflation will strengthen in 2013-16, in part reflecting the expected pattern of growth in energy costs. The current-account surplus is set to strengthen in 2012. The trade deficit will grow over the forecast period, resulting in an average current-account deficit of 2.4% of GDP in 2013-16.

Relations between Russia and Estonia could worsen after an Estonian court convicted a former security official of treason. Prosecutors alleged that the official passed sensitive information to the Russian Federal Security Service over several years. The case is likely to add weight to claims made by Estonians that Russia has increased its espionage in the Baltic states since they joined NATO and the EU in 2004.

On June 6th parliament adopted a law that obliges the main natural gas company, Eesti Gaas, to sell off its gas transportation infrastructure by end-2014. This will erode Russia's dominance of the Estonian energy market.
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Country Forecast Estonia Updater

Estonia at a glance: 2012-16
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast

Country forecast overview: Highlights

Country forecast overview: Key indicators

Country forecast overview: Business environment rankings

Country forecast overview: Estonia's business environment at a glance
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
The labour market

Fact sheet

Outlook for 2012-16: Political stability

Outlook for 2012-16: Election watch

Outlook for 2012-16: International relations

Outlook for 2012-16: Policy trends

Outlook for 2012-16: Fiscal policy

Outlook for 2012-16: Monetary policy

Outlook for 2012-16: Economic growth

Outlook for 2012-16: Inflation

Outlook for 2012-16: Exchange rates

Outlook for 2012-16: External sector

Data summary: Global outlook

Data summary: Gross domestic product, current market prices

Data summary: Gross domestic product, at constant prices

Data summary: Gross domestic product by sector of origin

Data summary: Growth and productivity

Data summary: Economic structure, income and market size

Data summary: Fiscal indicators

Data summary: Monetary indicators

Data summary: Employment, wages and prices

Data summary: Current account and terms of trade

Data summary: Foreign direct investment

Data sources and definitions
Global data
Domestic data
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Note: Product cover images may vary from those shown