Estonian quarterly inflation rises

Estonia's consumer price index (CPI) rose 1.6 per cent in the third quarter of 2008, according to statistics released Monday.

Prices in the Baltic nation rose by 10.9 per cent compared to the previous third quarter.

The latest figures were mainly influenced by price increases of alcoholic beverages and tobacco, but were mollified by decreases in the price of fresh vegetables.

Estonia's annual inflation currently stands at 10.5 per cent, but appears to be on a downward trend after peaking earlier this year.

Figures released on the same day showed that producer prices remained unchanged from August to September and were up 6.3 per cent compared to September last year.

Source http://monstersandcritics.com/news/business/news/article_143~

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Estonia may have 2009 budget gap

Estonia's economy may contract next year and the government may post a budget deficit after the economy entered a recession in the second quarter, Finance Minister Ivari Padar said, Bloomberg reports.

Any shortfall would have to be covered by government reserves that equal EEK 28 bln or 11 percent of expected GDP this year, Padar told Parliament in Tallinn today.

Governments of Estonia, Latvia and Lithuania are struggling to collect budget revenue and reluctant to cut spending as growth falters and inflation cuts consumers' buying power. They risk breaching the EU's budget deficit limit of 3 pct of GDP, officials in the three countries have said, Bloomberg writes.

"I practically don't see any space in this budget for additional spending cuts,'' Padar said. "You cannot totally curb a country's budget in one year. It would ruin the state.''

The Estonian government has approved a central government deficit of EEK 900 mln for next year, aiming for an overall fiscal balance under European Union rules that also include local governments and social insurance funds.

The budget, which still must be approved by lawmakers, is based on the Finance Ministry's August forecast of economic growth of 2.6 pct in 2009. Spending is seen increasing 9 pct, while revenue growth is set at 15 percent.

"It is perfectly possible that we will have to face zero growth, or even a contraction, but in any case I advise we hold on to the 2.6 percent forecast during the budget proceedings,'' Padar said during a question period in the legislature.

Estonia's budget shortfall may reach EEK 10 bln next year, compared with a 2008 deficit of EEK 3.1 bln forecast by the ministry, former Prime Minister and Estonian Business Association president Tiit Vähi said on October 9. That would equal 3.5 pct of the expected GDP this year, according to Bloomberg calculations.

Source http://balticbusinessnews.com/default2.aspx

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Specialist: The situation on Tallinn bourse is a small problem

What’s happening on Tallinn bourse is a small problem considering current financial crisis, said Peeter Koppel, strategist of SEB private banking to ERR News.

“The situation on Tallinn bourse is clearly nervous, but these turnovers are small and quite speculating small investors are operating there,” noted Koppel.

“Our downturn started before that global one. Institutional investors have already left here and those, who are keeping large positions here, have bigger problems in the rest of the world. At current price levels it’s not possible to sell large pieces and the second is whether they want to sell at all,” explained Koppel.

Although time may seem good for buying stock, Koppel said that it’s not knows yet what will be the rules after the crisis.

“There is a problem with buying that markets are extremely scared. And although the markets seems to scream that stocks should be bought at this price level, we can’t forget global financial system is messed up and no one knows what will be new rules in the context where old rules are not valid anymore,” said Koppel.

He added:” In other words playing on a short-time recovery is like playing a lottery. At the same time I don’t find that long-term investment should be forgotten. It’d be useful to spring from philosophy of value investing – to take few risks and to take them in long time and hedged.”

Source http://balticbusinessnews.com/default2.aspx

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