Estonian economy continues double-digit growth

The Estonian economy sustained high levels of gross domestic product (GDP) growth throughout 2006, hitting 11.2 per cent in the fourth quarter, the Estonian Statistics Bureau said on Tuesday. The flash estimate makes this Estonia’s seventh straight quarter of double-digit growth, a record for economic development only currently matched in the EU by neighbouring Latvia.

The main drivers of the surge were manufacturing, wholesale and retail activity, the bureau announced. Transport, logistics and financial services also contributed heavily.

Estonia has seen some of the fastest growth ever recorded in the EU since it joined the union in May 2004. With wages still among Europe’s lowest, the country of 1.35 million has scored success as a subcontractor for Nordic, especially Finnish, manufacturers.

Its land border with Russia and its former membership of the USSR have allowed it to develop logistical and financial mediation between Russia and the EU into a lucrative part of the economy.

Annual GDP growth in 2004 was 8.1 per cent, rising to 10.5 per cent in 2005 and expected to top 11 per cent in 2006.

However, over the same period annual inflation crept up from 3 per cent in 2004 to over 5 per cent in January 2007, casting doubt on Estonia’s ambitions to join the euro.

Tuesday’s figures are a flash estimate based on incomplete data. Previous preliminary estimates had a margin of error of 0.6 per cent, the bureau pointed out.

Source : DPA -German Press Agency-

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