KRISTIINA KULMANSILLE LI IV

Recent and future economic developments

General External Environment

End of 2009 - improvement in future outlooks for the economy.

Economic growth expected to be 3.9% for 2010 and 4.3% for 2011 according to the IMF-s global economic growth forecast.

Interest rates continue to be favourable throughout 2010.

Although the global economic recovery outlooks are improving there are still several risks.

Estonias economy

Economic growth and external demand. Recovery of export volumes.

Estonia`s exports in strong correlations with our main trading partners Finland and Sweden.

Domestic demand and external balance. Domestic demand weak, high and growing unemployment, declining wages and heavier tax burden. Current account balance improved rapidly due to weak domestic demand.

Inflation.Year on year consumer prices declined over entire second half of 2009. According to Eesti Pank`s autumn forecast the consumer basket will decline by 0.4% in 2010.

Labour market. The unemployment rate soared to 15.5% in the last quarter of 2009.

General government, 28 January 2010 new convergence programme which sets the task of achieving a general government budget surplus.

Banking sector, risks to financial stability shrank notably in 2009 , banks are expected to start posting profits in 2010.

Exports of Estonia, Finland and Sweden