Andres Saarniit, Adviser to the Economics Department of Eesti Pank

According to the flash estimate of Statistics Estonia, annual economic growth stood at 7.3 per cent in the second quarter of 2007. This indicates a further slowdown as expected, being generally in line with the spring forecast of Eesti Pank.

According to present data, both domestic demand as well as exports contribute to the slowdown. Statistics Estonia points to domestic market oriented fields of activity, such as retail trade and construction, which are still experiencing rapid growth although the growth rate has decelerated slightly. The available data show that the growth rate of goods exports has remained at the previous level, although part of that can be attributed to the higher prices of export goods. Thus, based on foreign trade statistics it can be concluded that the current account deficit has not increased any further.