S&P Raises Estonia Outlook Higher than America -- that's how bad it's getting

Swedbank in its economic outlook published on Tuesday raised the gross domestic product (GDP) growth forecast for Estonia for 2010 from 1.5 percent to 2.2 percent.

For both 2011 and 2012 Swedbank is predicting 4.5 percent annual GDP growth for Estonia.

Estonia's recovery is based on exports, which are benefitting from revived global trade and the regained competitiveness of local producers. Consumption has remained weak due to declining incomes; however, it has shown a slight pickup lately, as consumers' moods have turned positive. After an intensive period of destocking, inventories are now growing again.

"The recovery of Estonian economic growth is strongly dependent on external demand. As most of Estonia's main trading partners have recovered from the crisis faster than expected, Estonian exports have grown more than we forecast in April. This allows us to increase our expectations regarding export growth in 2010. We expect this to slow substantially in 2011, mostly due to a slowdown of growth in European markets but also due to capacity constraints in Estonian companies. Supported by the reviving global economy, we foresee Estonian export growth to increase in 2012," Swedbank said. (read more)