By Liis Kangsepp
TALLINN--Estonia cut its growth forecasts for the second time in
six months Monday, citing an even bleaker outlook for important
export markets, such as Finland, Latvia and Russia.
Finance Minister Jurgen Ligi said that growth would be 0.5% in
2014 compared with the 2% expected in April and the 3.5% expected
last autumn. He also cut his forecast for 2015 to 2.5% from
3.5%.
"It is clear that besides what is happening in Russia, our
closest neighbors Finland and Latvia--and the European Union in
general--are also lowering their expectations," Mr. Ligi said in an
interview.
Finland is Estonia's second biggest export market after Sweden
and takes 16% of the country's exports, while Latvia comes third
with 11%. Russia is fourth on the list, taking 10%, official data
showed earlier this month.
While Sweden's economy is still posting steady growth, Finland
is mired in recession and the government is mulling further
spending cuts and tax hikes to steady public finances.
Meanwhile, the Russian economy has weakened as capital has fled
the country amid increased tension with Europe and the U.S. over
Russia's support for separatists in Ukraine.
Europe and the U.S. have imposed economic sanctions against
Russia and Moscow has responded by banning the import of some
foodstuffs from Europe.
Exports to Russia have fallen sharply, Estonia's statistics
agency said early August.
"Russia is a lost market because Russia itself has been busy
destroying its demand, ability to import and its currency," Mr.
Ligi said. "Our prognosis is a... reminder: The biggest victims in
this situation are not Russia's partners but Russia."
Write to Liis Kangsepp at liis.kangsepp@wsj.com