Growth in wages and consumption is slowing says Ülo Kaasik
After the rapid growth in demand for labour in recent years, the economy is losing more and more momentum, and this is starting to restrain the growth in wages and consumption, said Deputy Governor of Eesti Pank Ülo Kaasik at the Äriplaan 2020 economics conference.
“Weaker foreign markets and the increased uncertainty there have already had an impact on many of our exporting companies. Domestic demand has remained strong so far, and retail sales, registration of new vehicles and consumer confidence all give grounds to presume that private consumption will continue to grow strongly this year. In the coming years the growth in consumption and investment will start to lose momentum as incomes stop rising quite as fast as they have been. The first signs of cooling in the real estate market are already evident, as the number of transactions is no longer rising, and the number of new housing loans has started to fall”, he said.
Data from Töötukassa at the end of August indicate there were around 4300 vacancies, or about one quarter fewer than a year earlier. At the same time, wage growth started to slow, and though it will remain around 7% this year, in the next two years it will come down to close to 5%.
Eesti Pank will release a more detailed forecast on 3 October in its review of the Estonian economy and monetary policy.
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