Economic tiger Estonia finds itself in recession

Things were bound to swing back eventually.

For years the small Baltic nation boasted the European Union’s highest growth rate, posting 11.4 percent GDP growth in 2006. Now, a market correction has struck hard at Estonian real estate and currency values. According to Le Monde, the Estonian economy shrunk 1.4 percent in the second trimester and the country’s inflation rate is over 11 percent.

The price of a square meter of property has decreased 15 percent in the capital, Tallinn; some regions are experiencing property value decreases of up to 30 percent. This, combined with food price increases due to inflation, has created a hostile economic environment for Estonia’s citizens, many of which are reportedly having to sell their homes to get by.

However, there are still good indicators for the Estonian economy. Their unemployment remains at the moment at 4 percent, although the government expects this to rise to around 6.3 percent by 2009 — still not too bad compared to most of Europe.