Republic of Estonia: 2008 Article IV Consultation - Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; And Statement by the Executive Director for the Republic of Estonia (Electronic book text)

1. Estonia is facing its most severe recession since the early 1990's. The downturn started as the reversal, in early 2007, of a credit-driven domestic boom and gained momentum from the global financial crisis and a collapse in domestic confidence. The recession is reducing domestic and external imbalances but its pace and depth have created large budget deficits and are putting pressure on private sector balance sheets. The consultation focused on the macroeconomic outlook, domestic and external financial sector vulnerabilities, and policy options for the difficult times ahead.