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Estonia's economy expanded 11.6% in Q3

Estonia's economy, the fastest growing in the European Union, expanded an annual 11.6% in the Q3, powered by consumer spending.

The pace of growth almost matched the 11.7% rate achieved in the previous three months, Tallinn-based Statistikaamet said on its Web site today. The economy grew 11.9% in the same period last year. We have “growth in wages, together with still growing loan portfolios,” said Anne Karik-Uustalu, a Tallinn-based analyst with Sampo Pank in an interview before the release. “It is still supporting the economy.” The unemployment rate fell to 5.4% in the 3Q, helping wages rise an annual 16.5%, the fastest rate in eight years. AS Hansapank, the biggest Baltic lender, said on October 26 its Estonian loan portfolio increased an annual 49% in the Q3 to €5.5 ($7.1 billion). Economic growth and spending are pushing up consumer prices which rose 3.7% in October. High inflation led the government on November 30 to drop for a second time its January 1, 2008 goal of adopting the euro and leave the date open. Countries wanting to make the currency switch must keep inflation within 1.5 percentage points of the 12-month average rate of the three European Union nations with the slowest consumer-price growth. Estonian inflation has been running about 1.5 percentage points above that target. Neighboring Latvia grew 11.1% in the Q3. The country releases Q3 growth data on December 8. (Bloomberg)