EY lowers Estonia's growth estimate to 1 pct

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EY, the global assurance, tax, transaction and advisory services group formerly known as Ernst & Young, on Thursday issued a fresh estimate on the economy of Estonia predicting the country's gross domestic product to grow 1 percent this year.

EY's previous growth forecast on Estonia issued in June was 2.8 percent.

The main reason for the downward revision is the poor state of affairs of the economies of Estonia's main trading partners, first and foremost Finland. "The situation of Finland could bring more manufacturing activities to Estonia on a temporary basis, but Finland's problems are problems of the whole of Europe," said Meelis Atonen, former Estonian minister of economic affairs.

EY still expects the Estonian economy to grow at a rate of 3.5 percent in the period from 2013-2017.

Inflation in Estonia is seen to hit 3.5 percent this year as a result of the hike in electricity price in January. Next year, when electricity will no longer dominate, inflation is seen to drop below 3.0 percent.

The rate of unemployment is estimated to be 8.6 percent this year and drop to 6.6 percent by 2017.

Estonia's public debt, equaling at 10 percent of GDP, was lower than in any other country of the eurozone in 2012 and is set to drop to 9 percent of GDP by 2017, according to EY.

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