29 November (ERR)

The Organization for Economic Cooperation and Development has increased its forecast for Estonian economic growth this year but lowered its projection for next year. The OECD said this summer the domestic economy would grow 5.9% but yesterday it revised it to 8%.

Next year's forecast has been cut from 4.7% to 3.2%, still slightly more than the Ministry of Finance's 3%. The Finance Ministry said that Estonia, which is an OECD member, was one of the few countries where the OECD's view was rosier than domestic sentiment.

"The OECD analysis supports our view that we have proceeded from a conservative line in drafting the next period's budget," Finance Minister Jürgen Ligi told uudised.err.ee. "[The OECD assessment] is proof that the formula for coping with the crisis is maintaining the public sector budget in proper order and adapting to a drop in spending in difficult times," he said.

The OECD said in the 28 November Economic Outlook that the threat of a deteriorating situation in Estonia's main trading partners and structural unemployment are risks to the Estonian economy. To hedge these risks, the OECD recommended strengthening the budgetary framework, legislating a budget position rule, and setting ceilings on spending. It also said active labour market measures had to be continued to avoid long-term unemployment and to benefit those returning from the foreign labour market.

Competition must also be ensured on the domestic market and along with close cooperation with Nordic institutions in maintaining the stability of the bank sector, the Paris-based organisation said.