OREANDA-NEWS. June 09, 2010. Nordea maintains its growth forecast for Estonian economy. In its new Baltic Rim Outlook forecast, Nordea Markets refers to a positive trend, illustrated by the first signs of export-led growth and the stronger position for the adoption of the euro, reported the press-centre of Nordea.

The outlook for the recovery of Estonian economy has further improved due to the recommendation of the European Commission to adopt the euro from the beginning of the next year. On Moday, finance ministers of the Eurozone gave their support to Estonia's accession. Nordea expects Estonia to join the Eurozone on January 1, 2010.

„The recovery is expected to be export-led, with reducing unemployment and thus supporting consumption as one of the government’s main challenges over the coming years,“ said Tonu Palm, Chief Economist at Nordea Markets.

„The latest data on both industrial production and retail sales confirm an export-led recovery of the Estonian economy, which is especially positive from the point of view of the sustainability of the growth. Mainly due to the low reference base, the year-on-year growth of industrial production made a whopping 18% jump in April. The production volume, however, still remains near the 2004 levels, thus lagging considerably behind the peak levels of 2008. Although export sales in manufacturing grew considerably (growth of 36% compared to April 2009), domestic sales remained weak (-12% year-on-year). This is a clear reflection of the export-led nature of the recovery. Attention to the export sector should remain an important keyword during both the growth and recovery phases of the economy," Palm said.

As regards Latvian economy, Nordea expects a stabilisation and a gradual recovery starting with the next quarter. The main support is expected to come from the export sector. Increasing the uncertainty in the economy is the political instability, which is likely to intensify ahead of the parliamentary elections in October.

Lithuanian economy is recovering gradually. The first quarter of 2010 was its weakest quarter since 2005: the main GDP components continued to decline. Consumption is still at weak levels and households lack confidence due to declining wages and rising unemployment. Thus, Nordea expects only lacklustre growth in Lithuanian economy this year.

In Russia, the first estimate for Q1 GDP was weaker than anticipated, indicating that the early recovery has been slower than expected. Nordea still expects growth to pick up later this year, with exports leading the recovery. In the long term the main risks to growth stem from the subdued activity in credit markets, capacity constraints in the energy sector and the inefficient structure of the economy.

The slowdown in the Polish GDP growth in Q1 was temporary and Nordea expects the recovery to continue. We are seeing more signs of a stabilising labour market and the Nordea Markets outlook forecasts that the unemployment rate will peak this year. That could bring new growth drivers such as investment, credits and the housing market out of their global financial crisis hideout. However, it also means fiscal and monetary tightening in the future.

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, approx.1,400 branch offices and a leading net banking position with 6 million e-customers. The Nordea share is listed on the NASDAQ OMX Nordic Exchange in Stockholm, Helsinki and Copenhagen.