Estonian Institue of Economic Research just published its October survey results and now the picture in industry and construction has turned gloomier than it ever has been (since 1993, when the surveys were started).
Current order books (both local and export) for industry stands at historical low and forecast for employment during next three months is very close to that. It is good to remember that during the previous crisis the unemployment jumped from 9,6% in 1997 to 13,6% in 2000.
In construction, the overall confidence index is at its all time low. And the trend is certainly downwards - more and more companies see the next 3 months to be worse than previous and plan to shed workforce.
The mood among consumers and retail sector is somewhat rosier, although the trend is also downward there.
My conclusion from this? Unemployment is definitely going up, with new round of negative effects for retail sector and mortgage loans.
Wednesday, October 08, 2008
Although Danske Bank forecasts were not very well regarded in Estonia a year ago, the events on ground have proven them quite accurate. So it is interesting to read that they are even gloomier on the situation in Iceland:
The past 24 hours have been extremely hectic in terms of news out of Iceland. This is the news so far:Ouch!
Yesterday, the Icelandic prime minister, Geir Haarde, addressed the nation. In his speech, Mr Haarde said that Iceland was facing very serious economic and financial challenges and that the Icelandic government would put forward a plan to parliament to stabilise the situation. However, the Icelandic government has so far failed to put forward any concrete measures.
The Icelandic authorities today surprisingly announced that Iceland would get a loan of EUR 4bn from Russia. However, a spokesman for Russian Prime Minister Putin has said that the Russian government does not have any knowledge of such a loan.
Today, the Icelandic central bank said it would peg the krona to the euro at a rate of EUR/ISK 131. Given the fact that the Icelandic FX reserve is less than USD 3bn, the peg does not look very credible, and we do not expect it to be maintained.
In March 2006, we wrote in our research note, Geyser Crisis, that Icelandic GDP could drop 5-10% if the country was hit by a credit crisis. Latest developments unfortunately confirm this bleak prediction.