Swedbank cuts Estonia's GDP growth outlook

27.08.2013, 16:26

Swedbank that today unveiled its Baltic Economic Outlook said that it had downgraded Estonia's economic growth outlook to 1.9% in 2013.

In its previous outlook published in April Swedbank expected Estonia's economy to grow 3.9%.

The bank's chief analyst Tõnu Mertsina said that Estonia's economy slowed down above expectations in the first half, mainly because of decrease in investments and lower demand from Estonia's main trading partners Finland and Russia.

"Estonia's economy is vastly influenced by the electronics assembly industry which in the last three quarters has contributed 0.6% into GDP growth. Since the first quarter GDP was up only 1.1%, it means that half of it came from the electronics assembly industry which shows how dominant it is and how poorly other industries are doing," said Mertsina.

He added, however, that corporate profits have remained strong.

Swedbank expects Estonia's economy to expand 3.9% in 2014 and 4.2% in 2015.