TALLINN -- Estonia will continue to be one of Europe's fastest growing economies with a 9.2 percent surge in gross domestic product this year, though rampant inflation will delay adoption of the euro beyond 2011, the government said Tuesday.
Citing its latest economic forecast, Estonia's Finance Ministry said GDP, boosted by strong domestic demand and exports, is expected to grow 8.3 percent and 7.7 percent in 2008 and 2009 respectively.
But the ministry expects inflation to continue rising and reach 4.9 percent this year and 5.2 percent in 2008. Finance Minster Aivar Soerd told reporters that inflation remains well above the level Estonia needs to join the euro-zone and that meeting this criteria was unlikely before 2011.
The Baltic country, which joined the European Union in 2004, originally planned to adopt the euro this year but was forced to postpone plans due to rising consumer prices.
Estonia's GDP grew a staggering 11.4 percent last year, the second highest in the EU, while growth in neighboring Latvia amounted to a record 11.9 percent for 2006.
International rating agency Fitch Ratings warned earlier this month that Estonian and Latvian economies are showing signs of overheating, while international banks are warning investors to hedge their currency risks in the two countries.
Estonian Finance Ministry http://www.fin.ee