Far from over!

This falls into the category that it ain’t over till it’s over!

Oliver Weeks & Alina Slyusarchuk, Morgan Stanley:

“The pain of maintaining currency pegs across the Baltics remains huge and, in our view, has only ever looked bearable given a quick and credible exit strategy (euro entry). Previously, vast current account deficits have adjusted in line with the disappearance of private sector financing, but at the cost of extraordinary collapses in demand. Real domestic demand contracted by 14.8%Y in Estonia in 4Q08, and the pace of decline continues to accelerate.