- The Ukraine crisis and Russian economic weakness are having an impact on economic performance in Estonia and the other two Baltic countries. Large trade exposure to Russia is slowing exports, and heightened geopolitical uncertainty is holding back investments, said Daniel Bergvall, Economist at SEB in Stockholm, as he and Peeter Koppel, Strategist and Analyst at SEB in Tallinn, commented on the Bank’s May 2014 Nordic Outlook.

- We have lowered our forecast on Estonia’s GDP to a modest 0,5% increase in 2014 and 2,3% in 2015. However, Estonia, as well as Latvia and Lithuania have buffers that make the risk of recession small. Real wage growth will help sustain private consumption. Strong public finances and small current account deficits also provide financial resilience.

- In Sweden, Estonia’s biggest foreign direct investor and also Estonia’s biggest export market for goods, the economic signals are mixed. Growth is being driven mainly by residential construction and household consumption, but export recovery will be weak.

- Sweden’s inflation is on par with historical lows. CPIF inflation fell to zero in March, and core inflation, CPIF excluding energy and food, fell to 0,2%. The inflation slowdown is broad and mainly attributable to domestic goods and services.

- Because of the low inflation, the repo rate is very likely to be lowered to 0,50% in July and we believe that a further key rate cut to 0,25% will happen in October this year.

- The 1966 spaghetti-western movie ‘The Good, the Bad and the Ugly’ is indeed symbolic when looking at today’s world economy, said Peeter Koppel and underlined that his presentation not necessarily reflected the official opinions of SEB.

- Just as the movie’s title implies, there are definitely good, bad and ugly issues going on in the world economy.

A full report from the Tuesday, May 27th Business Lunch with SEB at Swissôtel Tallinn will follow in the coming issue of focus – the magazine of the Swedish Chamber of Commerce in Estonia.

On behalf of the SCCE Council and the participating international Chambers of Commerce in Estonia, I would like to thank Daniel Bergvall and Peeter Koppel for their insightful and interesting presentations.

Sincerely,

Kristiina Sikk

SCCE Ombudsman