2013-02-21 09:09:18 - Fast Market Research recommends "Estonia Business Forecast Report Q2 2013" from Business Monitor International, now available

Core Views

We anticipate Estonia's economic recovery to persevere in 2013 driven primarily by consumer and investment spending. Moreover, a recovery in Estonia's exporting sector will result in a less-negative drag on headline growth than in 2012.

We maintain a positive view towards Estonia's fiscal trajectory. Stronger economic growth, which will boost revenues and help shrink the deficit as a proportion of GDP, will be key to the narrowing shortfall. Meanwhile, public debt is set to increase on the back of eurozone bailout fund contributions. However, Estonia's debt burden will remain well below other EU member states.

Popular support for Estonia's Reform Party, the majority coalition party, is likely to fall further as a result of an alleged party financing fraud. While the

pro-Russian Centre Party will remain popular amongst the ethnically Russian electorate, we see little scope for its inclusion in a potential re-shuffling of the coalition given deep ethnic political divides.


Full Report Details at
- www.fastmr.com/prod/536355_estonia_business_forecast_report_q2_2 ..


Major Forecast Changes

No major forecast changes since our last quarterly report

Risks To Outlook

As a member of the eurozone, Estonia remains highly exposed to the sovereign debt crisis, an intensification of which would have a deleterious impact on Estonia's macroeconomic outlook.

Partial Table of Contents:

Executive Summary
Core Views
Major Forecast Changes
Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Further Political Dislocations Ahead
- Popular support for Estonia's Reform Party, the majority coalition party, is likely to fall further as a result of an alleged party financing fraud. While the pro-Russian Centre Party will remain popular amongst the ethnically Russian electorate, we see little scope for its inclusion in a potential re-shuffling of the coalition given deep ethnic political divides.
TABLE: POLITICAL OVERVIEW
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Relatively Strong Economic Growth To Persist
- We anticipate Estonia's economic recovery to persevere in 2013 when we forecast real GDP growth of 3.3%, up slightly from 3.2% estimated in 2012. Consumer and investment spending will remain mainstays of economic growth this year. Moreover, a recovery in Estonia's exporting sector will result in a less negative drag on headline growth than in 2012.
TABLE: ECONOMIC ACTIVITY
FX Forecast
Euro Downtrend: Temporary Disconnect
- Having rallied into the third quarter following the European Central Bank (ECB)'s pledge to purchase encumbered eurozone sovereign debt (conditional on the target Member State first agreeing to a structural macroeconomic adjustment programme), the euro is now testing key resistance at US$1.3000/EUR. This would ordinarily suggest potential for a more pronounced rally towards US$1.4000-1.4500/EUR. However, we believe that any technical breach US$1.3000/EUR could see the euro drift towards US$1.3500/EUR before paving the way for a fresh round of depreciation.
TABLE: EUROZONE CURRENCY FORECAST
TABLE: FISCAL POLICY
Fiscal Policy
Fiscal Prudence To Prevail
- We forecast Estonia's budget deficit to fall to 0.8% of GDP in 2013 from an estimated 1.2% of GDP in 2012. Stronger economic growth, which will boost revenues and help shrink the deficit as a proportion of GDP, will be key to the narrowing shortfall. Meanwhile, public debt is set to increase on the back of eurozone bailout fund contributions. However, Estonia's debt burden will remain well below other EU member states.
Monetary Policy
The Evolution Of The Monetary Transmission Mechanism
- The global financial crisis and subsequent sovereign debt crisis in the eurozone have depleted the European Central Bank's traditional monetary policy tools, paving the way for more creative and esoteric initiatives to stabilise funding markets and bolster credit creation.
Monetary Policy II
Inflation To Ease Further
- We expect consumer price inflation to gradually fall in Estonia over the course of 2013 and average 3.5%, down from an estimated 4.3% in 2012. Although steady global commodity prices will prevent a sharp increase in price growth, continued strong domestic demand will provide strong support for elevated prices until the second half of the year.
TABLE: INFLATION
Regional
Key Themes For 2013: Emerging Europe
- The gradual global recovery is set to affect Central and Eastern Europe (CEE) in various ways. Below, we identify key trends and themes for the sub-region s over the next 12 months .
Chapter 3: 10-Year Forecast
The Estonian Economy To 2022
Trend Growth To Average Much Less In 2016-2022
- Trend average growth in Estonia is forecast to average 2. 6% between 201 6-202 2, well below the 7.6% from 2001-2007. That said, we stress that the worst effects of the 2008-2010 recession are now passed and the economy is well positioned for sustainable long-term growth.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 4: Business Environment
SWOT Analysis
BMI Business Environment Risk Ratings
Business Environment Outlook
Institutions
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
TABLE: BMI LEGAL FRAMEWORK RATING
Infrastructure
TABLE: LABOUR FORCE QUALITY
TABLE: EMERGING EUROPE - ANNUAL FDI INFLOWS
Market Orientation
TABLE: TOP EXPORTS, 2001-2009
Operational Risk
Chapter 5: Key Sectors
Autos

Full Table of Contents is available at:
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