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Friday, April 4, 2008

EU Economic Sentiment Indicator For the Baltics March 2008

According to the Estonian Institute for Economic Research Survey, consumer confidence bounced back slightly in March, from the ultra low reading of minus 16 in February to the pretty low one of minus 11 in March. To put things in a little perspective here, when the reading hit minus 11 for the first time in January, this was an all time historic low for the index, now, of course it isn't, since things got even worse in February, at least according to the sentiment index. On the other hand this does fit in with a variety of other data we have been getting which lead us in the direction of thinking that things weren't getting worse quite so rapidly in Estonia in March.

The European Commission has also now reported its eurozone “economic sentiment” indicator for March, with the composite number bouncing back a little from the February reading which its lowest level since December 2005. The indicator, which gauges optimism across all economic sectors and is regarded as a good guide to likely future trends, was back up to 102 after falling to 100.1 in February from 101.7 in January.

This indicator provides a little more evidence for the above hypothesis about Estonia, since as can be seen in the chart below, the Estonian index has stabilised since December, while those for Latvia and Lithuania continue to head down. Of course all of this is relative, since they are both at levels above the current Estonian one.

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