Wednesday, May 14, 2008

(Almost) Baltics-wide recession alert

Economic "growth" in the 1st quarter of 2008, compared to Q4 2007, seasonally adjusted:
The reasons behind this are the same in all 3 countries. They all boomed in the last 7 years, helped by cheap credit from Scandinavian banks. Now, the developing credit bubble pushed the banks to cut bank on credit, triggering a recession. Events in Lithuania are a few months behind Latvia and Estonia but seem to be in the same direction.

Several other Eastern European countries (Romania, Bulgaria, possibly also Slovakia and others) show economic trends similar to pre-recession Baltics and might get affected, but there is no sign of recession there yet.

*Since Latvia's statistics office only releases seasonally unadjusted numbers, Latvia's number comes from my own back-of-the-envelope seasonal adjustment. The numbers for Estonia and Lithuania are official.

UPDATE (9/6): all three Baltic nations have updated their initial estimates of 1st quarter GDP. Here is a new post with the updated numbers.

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