OREANDA-NEWS. February 06, 2009. Deputy Governor of Eesti Pank ANDRES SUTT attended a meeting held in Stenbock House between opposition fractions, employers and trade union representatives, where he said that following the intensification of the financial crisis last autumn the global economic outlook has considerably deteriorated, and this requires new fundamental decisions to support Estonia's budget and general development, reported the press-centre of Eesti Pank.

Sutt emphasised that considering the current economic environment and outlooks it is essential to bring the 2009 fiscal expenditure into line with the changed situation, since without a 8-9 billion kroon cut in expenditure the accumulated reserves will dry up very rapidly.

"Temporary measures would be of no use in improving the state budget. At this point in time we need to take fundamental decisions in order to ensure Estonia's further development and economic credibility," Sutt said.

He added that economic outlooks have worsened everywhere and it is difficult to predict the size and duration of the financial crisis induced recession in the world. For instance, the recent forecasts by the IMF and the European Commission expect a marked decline in the 2009 global economic growth with the USA economy slowing to -1.6% and the euro-area economy to -1.8%. According to the forecasts, growth should start to recover in 2010.

"These forecasts are broadly in line with Eesti Pank's autumn forecast risk scenario. But taking into account the deepening impact of the economic and financial crisis, an even further slowing of the economies of Estonia's main trading partners cannot be ruled out. Should such developments materialise, our estimate is recession in Estonia may amount to approximately 9%. Uncertainty about the future increases the importance of swift and timely measures supporting the stability of public finance and Estonia's competitiveness," Sutt explained.