MÄRTEN ROSS: earlier economic reforms help ensure economic sustainability

Today, April 18, Deputy Governor of Eesti Pank MÄRTEN ROSS participates in a panel discussion within the framework of the seminar "Bretton Woods 2 Under Stress" organised by the Central Bank of Spain. He speaks about the sustainability of developing economies against the background of slowing global economic growth based on the example of the Baltic States.

The outlooks of the global economic environment continue to be poor, primarily due to the inhibiting economic growth in the USA. "The most pressing question of recent months has been what the extent of the financial turbulences stemming from the US financial markets is. The decrease in interbank trust has reached also the euro area and is sure to affect the financial system of developing countries. At the same time there are speculations about the possibility that the current global economic cycle allows developing countries to play a stabilising role. Estonia has so far been very little impacted and our financial sector remains strong, ensuring the financing of the economy," Ross said.

The uncertainties arising from the financial system are gradually reaching the economy. This is manifested in the deteriorating economic growth outlooks of several countries. "If the economic activity of our trading partners declines, it is possible it will decrease the Estonian exports, but so far, our foreign trade situation has been good," Märten Ross said. He added that a much more serious problem is global inflation, which can also be associated with the financial market turbulences. "The impact of price growth has been large-scale and very strong. Food and fuel prices are high in both global markets and small countries. This, in turn, affects people's confidence," explained the Deputy Governor.

"Countries like Estonia are able to survive the recession period relatively painlessly owing to earlier economic reforms, but we definitely have to take into account there will be some changes in the economic structure. So far, Estonia has managed them successfully."