Estonia Raises GDP-Growth Forecast for 2014 as Exports Rebound

Estonia raised next year’s economic-growth forecast as exports in the newest euro-area member resume their expansion and wage growth boosts domestic demand.

Gross domestic product will probably expand 3.6 percent in 2014, more than last August’s 3.4 percent forecast, the Finance Ministry, based in the capital, Tallinn, said today in an e-mailed outlook. It kept this year’s projection at 3 percent.

Estonia, which adopted the euro in 2011, has weathered Europe’s debt crisis as Swedish and Finnish demand for its electronics and wood products helped its economy recover from a 20 percent contraction in the wake of Lehman Brothers Holdings Inc.’s 2008 demise. GDP expanded 3.2 percent last year, the European Union’s third-fastest pace behind Latvia and Lithuania.

The budget deficit will probably widen to 0.5 percent of GDP this year from a preliminary 0.3 percent in 2012, the Finance Ministry said. That’s less than the 0.7 percent shortfall set in this year’s budget. The gap may be 0.1 percent in 2014, the ministry said.

Consumer prices will probably rise an average 3.4 percent this year, less than the 3.5 percent advance seen in August and last year’s 3.9 percent increase, according to the ministry. Inflation may slow to 2.8 percent next year, in line with the previous forecast, it said.

Before it's here, it's on the Bloomberg Terminal.