Green shoots little comfort for Baltics

(RIGA) - Signs that Lithuania, Latvia and Estonia may be emerging from recession have brought little comfort in the Baltic states, as the public braces for the worst economic winter in years.

As ordinary people continue to feel the impact of rising unemployment and deep anti-crisis spending cuts, analysts warn it is too soon to say when the nightmare could end.

Nina Bazenova, a 47-year-old teacher in the Latvian capital Riga, is suffering.

Her salary has been cut by 20 percent while her workload has increased by a third, she told AFP.

She and a pensioner relative are supporting her three unemployed adult children -- the jobless rate in Latvia, a nation of 2.3 million, is an EU-high of 19.2 percent.

Along with a five-year-old grandson, they all live in a three-room apartment.

"I don't know whether or not I'll have a job after New Year's," she said, adding that she fears a replay of the hard times that hit the region following the demise of the Soviet Union.

The Baltic states won independence from Moscow in 1991. The region was hit by a shockwave as the communist economy fell apart.

In a report released this week, the World Bank said unemployment is expected to grow in the region, especially among young people.

"Almost one third of the economically active population below 24 years of age is unemployed in the Baltic countries," it said.

Analysts remain cautious about recent, positive economic data.

"They're a little bit too good to be true," said Morten Hansen of the Stockholm School of Economics' branch in Riga, commenting on figures this week which indicated that Latvia's neighbour Lithuania, a nation of 3.3 million, had emerged from recession.

Lithuania surprised the financial world with preliminary, seasonally-adjusted data showing output over the three months to September had grown by 5.1 percent compared with the second quarter.

That came after four successive quarters of economic contraction, including a 7.4-percent decline in the second quarter and 11 percent in the first.

Hansen said the Baltic trio's recent double-digit collapse, on a par with the Asian crisis of 1997, appeared to be easing.

"It's called stabilisation here, but we're used to seeing big numbers," Hansen told AFP, adding he would wait for the second estimate due November 27 to draw conclusions about a recovery.

Lithuania is due to issue revised third-quarter data on November 27.

Even its embattled government has avoided popping the champagne.

"We can talk about recovery only when GDP grows for two quarters in a row. But personally I'm very happy about the GDP figures," Finance Minister Ingrida Simonyte told AFP.

"Industry and business is slowly moving forward but it's too early to say when we'll see the result in people's pockets," she said.

Jekaterina Rojaka, senior analyst at DnB Nord bank in Lithuania, also said it was too early to celebrate. "We can talk only about stabilisation now," she said.

Latvia and Estonia are due to issue third-quarter data in early November.

The government of Latvia -- the only member of the trio to seek an international bailout to stay afloat -- has been striking an optimistic tone.

Since August, Latvian Prime Minister Valdis Dombrovskis has underscored the slower pace of the slump. Latvia's output contracted by a seasonally-adjusted 0.8 percent in the second quarter compared with January to March, after 11 percent in the first quarter.

Output in Estonia, a country of 1.3 million, contracted by 3.4 percent in the second quarter on the same basis, after 6.0 percent in the first.

On Thursday, Estonia said it was sufficiently confident about its economic outlook to repay a 50-million-euro (74-million-dollar) crisis bank loan obtained from Swedish bank Swedbank in May.

But official forecasts for the region remain stark.

Latvia's economy is expected to shrink by 18 percent this year and 4.0 percent in 2010.

Lithuania has forecast an 18.2-percent contraction this year, although analysts suggest it may turn out to be 15.5 percent. Output is expected to shrink by 5.2 percent in 2010.

Last week, Estonia shaved its prediction to 14.2 percent from 15.3 percent, and said it foresaw 1.4-percent growth in 2010.

All three posted spectacular growth rates in the three years after they joined the European Union in 2004, sparking warnings of overheating.

Their economies were driven by breakneck domestic consumption, plus a credit and real estate bubble, leaving them particularly vulnerable to the worst global crisis since the 1930s.