Estonia records surplus as Baltic recessions seen at bottom

Sep 8, 2009, 10:56 GMT

Riga - Hopes that three Baltic states have seen the bottom of the economic downturn received a boost on Tuesday with the release of a slightly better-than-expected economic report from Estonia and an upbeat assessment in Latvia.

Estonia's gross domestic product (GDP) decreased by 16.1 per cent in the second quarter of 2009, compared to the same year-ago quarter. The figure was slightly better than an earlier forecast of a 16.6-per-cent contraction.

Neighbouring Latvia suffered a sharper decline, with an 18.7-per -cent drop in its GDP in the second quarter compared to the same period the previous year.

Estonian GDP has now decreased for six successive quarters. Data released Monday showed Estonian inflation at minus 0.9 per cent in August compared to August of the previous year.

Andres Saarniit of the Estonian central bank said in a statement that despite the decline, the country's current account recorded a small surplus of about 5 per cent of domestic production.

'Although this surplus is not sustainable, it reduces the impact of the global financial and economic crisis, making the Estonian economy less vulnerable,' he said.

Latvia's second-quarter economic performance was particularly affected by declines in construction and manufacturing, 29.5 per cent and 24.4 per cent, respectively.

Consumer prices in Latvia fell by 1 per cent from July to August, resulting in an annual inflation rate of 1.8 per cent, down from 2.5 per cent in July.

Speaking on Latvian television shortly before the release of the figures, Prime Minister Valdis Dombrovskis said Latvia had probably reached the low point of its recession.

In Lithuania prices for consumer goods fell by 0.2 per cent from July to August, the fifth month in a row for which prices have declined. The annual rate of inflation now stands at 2.6 per cent, down from 3.0 per cent in July.