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Nordea raises Estonia’s economic growth forecast to 3.3 percent

Nordea has raised its economic forecast for GDP growth in Estonia this year to 3.3 percent, up from 3.1 percent in its previous estimate in June. The bank is also estimating at least 2.9 percent growth in 2018.

“A broad-based recovery has set in after a 4.4 percent growth in GDP in the first quarter, with the outlook for exports and investment lifted by foreign demand and a kickstart to infrastructure spending,” Nordea chief economist Tõnu Palm said in the bank’s economic outlook, noting that exports of both goods and services are growing.

“Consumption got off to an exceptionally weak start at the beginning of the year, growing 0.7 percent on year in the first quarter, and was restrained by a strong rise in inflation,” he continued. “The inflation gap vis-a-vis the eurozone average has temporarily shot to above two percentage points.”

The economist also noted that increases in labor demand and non-taxable income coupled with moderating inflation will support consumption next year.

In the first six months of 2017, retail sales in the eurozone grew similarly to Estonia by 2.2 percent, but retail turnover growth in Estonia has increased at double the speed of the eurozone, growing 7.3 percent.

Export of goods and services increased by 8 percent in the second quarter.

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