Mof Summer 2010 Macroeconomic Forecast

545 views

Published on

Published in: Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
545
On SlideShare
0
From Embeds
0
Number of Embeds
52
Actions
Shares
0
Downloads
12
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Mof Summer 2010 Macroeconomic Forecast

  1. 1. Estonian Ministry of Finance 2010. Summer Forecast A ugust 25 th 2010
  2. 2. Macroeconomic Forecast <ul><li>Economic growth by 2% in 2010 and 3,6% in 2011 is relatively good outcome </li></ul><ul><li>Inflation 2,6% in 2010 and 2,5% in 2011 </li></ul><ul><li>Economic growth stronger than expected supported by increased competitiveness and external demand </li></ul><ul><li>Current inflation mainly imported, fruther developments in accordance with economic growth and productivity </li></ul><ul><li>Employment increase stable, but more restrained than desired </li></ul>
  3. 3. Economic growth in 2010Q2
  4. 4. 1. Macroeconomic Forecast Andrus Säälik Head of Macroeconomic Policy Department
  5. 5. Fundamentals of Forecast <ul><li>Recovery from the crisis in 2010. faster than expected (export, industry) </li></ul><ul><li>Domestic demand starts to pick up in 2nd half of 2010 supported by investments </li></ul><ul><li>Consumption courage is increasing </li></ul><ul><li>In 2010. inflation higher than expected (commodities, bad weather conditions), further developments in accordance with economic growth </li></ul><ul><li>Uncertainty in respect to 2011. outlook has increased </li></ul>
  6. 6. Recovery from crisis is faster
  7. 7. 1.1. External environment and trade
  8. 8. Source: Eurostat Exports has recovered rapidly in the EU, the growth rate reached almost 40% in the Baltics.
  9. 9. Growth of exports has been strong in last months, being affected by the internal readjustments of companies and the pick up of the foreign demand
  10. 10. 1.2. Domestic demand
  11. 11. Consumers confident in state success
  12. 12. Convergence in households’ saving rate
  13. 13. Consumption recovering?
  14. 14. Upwards trend of VAT
  15. 15. 1.3. Labour market and prices
  16. 16. 5000 new wage-earners during one quarter
  17. 17. Registered unemployment on downward trend since April
  18. 18. Unemployment is falling, but the pace is more restrained than desired
  19. 19. Mostly foreign factors and severe weather conditions, also increases in indirect taxes are behind the higher inflation
  20. 20. Inflation will fluctuate between 2.5–3% in near future, in line with the productivity and economic growth
  21. 21. 1.4. Risks
  22. 22. Outside Europe qoq growth loosing pace, pessimism is back
  23. 23. Risk scenario: exports will grow just one year?
  24. 24. Risk scenario: exports will grow just one year?
  25. 25. Risks <ul><li>Labour market </li></ul><ul><ul><li>Improvement mostly due to seasonal factors </li></ul></ul><ul><ul><li>Economic growth based on increasing productivity – need for new workers? </li></ul></ul><ul><li>Inflation boosting in short term, 4% at the end of year </li></ul><ul><ul><li>Several one-off factors and surprises </li></ul></ul><ul><ul><li>Expectations </li></ul></ul><ul><ul><li>Price convergence is continuing </li></ul></ul><ul><li>Export </li></ul><ul><ul><li>Recovery effect up to 2011 </li></ul></ul><ul><li>Growth expectations in light of Q2 growth </li></ul>
  26. 26. Public Finance Sven Kirsipuu Adviser Public Finance and Strategies Department
  27. 27. Public Finance keywords in 2010–2014 <ul><li>The growth of economic activity increases the tax revenues </li></ul><ul><li>Requested 2011 budget expenditure exceeded the limit-amounts by 4.8 bln EEK </li></ul><ul><li>Selling of emmission quotas and associated investments influence the budget position </li></ul><ul><li>Budget balance by the end of the forecast period </li></ul>
  28. 28. Tax revenues exceed the budget by 2.0 bln EEK   2010 budget Spring Forecast Summer Forecast Summer vs Spring Taxes in total 61 767.5 63 096.4 63 757.4 661.0 incl. PIT 3 220.0 3 210.0 3 150.0 -60.0 CIT 2 425.0 3 400.0 3 190.0 -210.0 Social tax 26 970.0 26 600.0 26 600.0 0.0 VAT 19 030.0 19 000.0 19 400.0 400.0 Excise on alcohol 2 330.0 2 540.0 2 600.0 60.0 Excise on tobacco 1 830.0 1 800.0 1 970.0 170.0 Excise on fuel 4 870.0 5 420.0 5 660.0 240.0 Gambling tax 215.0 320.0 307.0 -13.0 Non-tax revenues 22 760.6 23 552.3 23 798.7 246.4
  29. 29. One-offs increase the deficit in coming years
  30. 30. No structural problem in the budget
  31. 31. Tax burden set to decline
  32. 32. Estonia still has net assets by the end of 2010
  33. 33. Thank you!
  34. 34. Main indicators 2009 2010* 2011* 2012* 2013* 2014* Economic growth -14.1 2.0 3.6 4.0 3.8 3.5 GDP in current prices 214.8 218.2 230.4 245.5 261.5 278.3 CPI -0.1 2.6 2.5 2.6 2.7 2.7 Domestic demand -23.9 -0.2 4.3 4.1 4.7 4.6 Export -11.2 15.1 9.0 6.7 7.1 6.5 Employment growth -9.2 -5.0 0.8 1.6 1.8 1.7 Real wage growth -4.5 -3.2 0.1 1.0 1.6 1.5 Unemployment rate 13.8 17.5 15.4 13.6 11.4 9.4 Current account 4.6 4.3 2.3 0.3 -2.1 -4.4
  35. 35. Forecast of Estonian economic growth for 2010
  36. 36. Forecast of Estonian economic growth for 2011
  37. 37. Economic growth in different regions
  38. 38. In 2010 foreign demand stronger than expected
  39. 39. Estonian exports growth vs developments of main trading partners
  40. 40. Spare production capacities’ reserve still there, export orders strong
  41. 41. 2010–11: after crisis fast recovery
  42. 42. Current account surplus will turn to deficit because of the rise in import volumes and increasing profitability of foreign investments
  43. 43. Share of private consumption remains lower
  44. 44. Investments presumably recover
  45. 45. Employment by sectors
  46. 46. Wage decline stopping
  47. 47. Average payment by sectors
  48. 48. Average payment by sectors (2)
  49. 49. Average wage
  50. 50. Changes in tax policy– excise duty increases, VAT, state duties. Other administrative changes – electricity, water, gas, heat energy. Other goods and services – close to core inflation (2009-2010 without VAT increase). Contribution to CPI

×