The global
economic outlook has improved sharply during the past months as many economies
around the world have emerged from the recession. Despite a rebound in export
demand, the outlook for the Baltic countries remains weak.
- We expect
all the economies to gain some momentum in 2010 and return to positive growth
in 2011, says Helge J. Pedersen, Global Chief Economist in Nordea.
In Estonia
the economy is slowly finding foothold in some sectors, but weak domestic
demand still remains an obstacle for a rebound. A revival of the Nordic
economies would, however, provide strong possibilities of a revitalisation in
export demand.
Despite
increasing export demand by Russia and the EU, the Latvian economy
continued its steep decline throughout Q3, with the flash estimate indicating a
GDP contraction of 18.4% y/y. Recently, devaluation speculations have
re-emerged.
The Lithuanian
economy contracted sharply during the first three quarters of this year,
leaving the country in the middle of a steep recession, with contraction
expected to continue into 2010. The budget deficit is expected to approach 10%
this year and remain around 9% in 2010.
The Polish
economy is expected to gradually recover and reach a normal state growth-wise
in 2011. - Consumer spending has been a key reason why the economy has steered
clear of recession, but it shows signs of weakness. We expect an increase to
remain at a very moderate pace well into 2010, says Senior Analyst Anders
Svendsen, Nordea's expert on Poland.
Russia was hit hard by the financial crisis
as well as the fall in commodity prices, with GDP falling 10.9% in Q2. Strong
oil prices and an improved export outlook point to a stabilisation of the
economy. However, a sharp decline in investment during first half of 2009,
combined with shrinking private consumption, indicates a slow and fragile
recovery.
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