Estonian Economy and Monetary Policy 3/2007

Monetary Developments & Policy Survey. March 2007

CONTENTS

INTRODUCTION
I SUMMARY
Main economic developments in 2007-2009
Global economy and Estonia's economy
Monetary policy and financial sector
External and domestic demand
External balance
Labour market
Inflation
General government
Economic policy conclusions
ECONOMIC ENVIRONMENT AT THE END OF 2006 AND THE BEGINNING OF 2007
II GLOBAL AND EUROPEAN ECONOMY
Monetary policy environment
Growth outlook
Inflation
Financial and commodity markets
III MONEY AND CAPITAL MARKET
IV DEMAND AND SUPPLY
Domestic demand
Investment
Private consumption
General government
External demand and domestic supply
Industry
Services sector and other fields of activity
Labour market
External balance
V INFLATION
Consumer prices
Household incomes and inflation expectations
Exchange rate of the Estonian kroon and competitiveness of enterprises
ECONOMIC FORECAST
VI ECONOMIC FORECAST FOR 2007-2009
Summary
Base forecast scenario
Economic growth
Domestic demand
Investment
Private consumption
Labour market
External balance
External debt
Inflation
Food, tobacco and alcohol
Motor fuel
Energy used by households
Core inflation
Banking sector
Corporate credit
Household credit
Risk scenarios
Risk scenario 1: sudden stop
Risk scenario 2: the bubble expands
Conclusions

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