OREANDA-NEWS. May 07, 2010. Nordea, a leading European bank, now has a more positive outlook on the Estonian economy, due to the recovery of export demand, and expects a growth rate of 1.2%. Still, this can only materialise, if the investments of both the private and public sector undergo a structural change, reported the press-centre of Nordea.   

In its forecast Economic Outlook Nordea confirms that statistics reflect an improvement across the European economies. The Estonian economy adheres to the general trend of change and Nordea expects export-based economic growth to replace the recession. Nordea has raised the growth prognosis for Estonia to 1.2% from the past -0.5%. In 2011, Nordea expects the Estonian economy to grow by 4%.

„Positive growth numbers can transform into sustainable success, if we do our homework and understand in which sectors to invest. Current statistics still indicate that we are continuing the pre-crisis trend of investing in construction and real estate development. A growing economy presumes informed investment into the exporting sectors,“ Nordea Estonia’s CEO Vahur Kraft said.

Kraft added that the 12-month average inflation rate continued to stay among the three lowest of the EU countries. Estonian budget deficit will remain below 3% during the next years and inflation pressures can also be expected to stay low in the next few years.

According to Nordea, the unemployment rate will remain relatively high in the upcoming years. The financial group forecasts an unemployment rate of 17% for this and 16.2% for the next year. History of economic crises around the world has demonstrated that improving of the employment situation takes longer than expected; for the next few years, reducing unemployment will be a major challenge for Estonia.

Nordea expects an inflation rate of 0.5% for this and 1.5% for the next year. Estonia’s 12-month inflation rate is among the three lowest in the EU countries. „Sustaining the low inflation rate is very important in the long term, in the light of both euro adoption and improving our general competitiveness,“ Kraft said. Estonia has fulfilled all the criteria for adopting the euro and will presumably introduce it from January 2011.

Nordea forecasts that Latvian economy will continue to decline this year. Especially private consumption and investment have remained on a weakening trend. Political instability is the main risk ahead of the parliamentary elections in October and the cuts in the 2011 budget are likely to be postponed to after the elections.

In Lithuania, the economy is seen improving gradually, with the steepest drop in GDP in Q1 2009. However, the economy has mainly been supported by the stabilisation in exports and inventory rebuilding. Nordea has revised the growth forecast for 2010 upwards, based on strong export demand. A challenge in the near term will be cutting the budget deficit, which currently postpones EMU membership to at least 2014.

A member of a leading European finance group, Nordea is the only universal bank in the Estonian market with the highest AA credit rating, offering services to both private and corporate customers. Nordea brand covers all major banking products: loans, bank cards, savings and investment products (including leasing and pensions), everyday banking transactions. Nordea is creating new opportunities for its clients, so they can manage their finances with the help of personal counselling, helping both private and corporate customers to make good financial decisions.

Nordea’s vision is to be a Great European bank, acknowledged for its people, creating superior value for customers and shareholders. We are making it possible for our customers to reach their goals by providing a wide range of products, services and solutions within banking, asset management and insurance. Nordea has around 10 million customers, approximately 1,400 branch offices and a leading online banking position with 6 million e-customers. The Nordea share is listed on the NASDAQ OMX Nordic Exchange in Stockholm, Helsinki and Copenhagen.