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Estonia: Economic Growth Lower Than Expected

Tallinn, 2 October 1996 (RFE/RL) -- Estonia's economic growth has slowed down in comparison with last year, says the report by the Estonian Market Research Institute that was made public yesterday. At the same time, experts warn of the possible overheating of the economy.

Last December the institute forecast this year's economic growth to reach 3.8 percent. Institute experts say now that it will be lower.

Growth has been restrained by problems connected with the competitiveness and export possibilities, experts say. The growth of the domestic market has not been sufficient to secure proposed economic development.

But the report found positive signs in the continuing low unemployment, decrease in inflation and in the expansion of domestic market. The majority of experts estimated that the general economic situation is better than a year ago.

Former Estonian government economic adviser Ardo Hansson said last week that the biggest danger is in overheating the economy and in the growth exceeding current capabilities. Estonia has more spare finances than good business projects, said Hansson.

This is expressed by the increase of money supply, rapid inflow of foreign capital and rise in salaries.

"The Estonian economy rather needs a cooling shower than any additional stimulus," said Hansson.