Republic of Estonia: 2007 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Estonia

International Monetary Fund

No 2007/255, IMF Staff Country Reports from International Monetary Fund

Abstract: The Republic of Estonia’s 2007 Article IV Consultation reports that surging domestic demand has widened the external current account deficit and pushed the economy against capacity constraints. Wage increases have begun to erode competitiveness and kept inflation above the Maastricht threshold for euro adoption. There are signs of an incipient slowdown, but a resurgence of demand and an eventual hard landing, with growth stagnating, cannot be ruled out. A strong fiscal stance is needed to subdue wage and income expectations and improve the odds of a soft landing.

Keywords: ISCR; CR; Estonia; criterion; lending; CPI basket; inflation criterion; EU labor market; budget surplus; government debt; labor productivity growth; Inflation; Income; Current account deficits; Baltics (search for similar items in EconPapers)
Pages: 49
Date: 2007-07-30
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