Republic of Estonia: 2007 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Estonia
July 30, 2007
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The Republic of Estonia’s 2007 Article IV Consultation reports that surging domestic demand has widened the external current account deficit and pushed the economy against capacity constraints. Wage increases have begun to erode competitiveness and kept inflation above the Maastricht threshold for euro adoption. There are signs of an incipient slowdown, but a resurgence of demand and an eventual hard landing, with growth stagnating, cannot be ruled out. A strong fiscal stance is needed to subdue wage and income expectations and improve the odds of a soft landing.
Subject: Balance of payments, Banking, Current account deficits, External debt, Income, Inflation, National accounts, Prices, Public debt
Keywords: Baltics, budget surplus, CPI basket, CR, criterion, Current account deficits, Estonia, EU labor market, government debt, Income, Inflation, inflation criterion, ISCR, labor productivity growth, lending
Pages:
49
Volume:
2007
DOI:
Issue:
255
Series:
Country Report No. 2007/255
Stock No:
1ESTEA2007001
ISBN:
9781451812527
ISSN:
1934-7685
