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International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 06:43

Latvian Economy Ministry keeps GDP growth forecast at 2% for 2015

BC, Riga, 21.05.2015.Print version
Latvia's gross domestic product may grow 2% in 2015, and inflation may reach 0.5%, the Economy Ministry predicts, cites LETA.

The ministry's GDP growth projection remains unchanged since the previous forecast released in February, whereas inflation forecast has been reduced 0.5 percentage points.

 

The Economy Ministry's latest report, "On the Macroeconomic Situation in the Country", says that further economic development in Latvia will continue to rely heavily on export opportunities, therefore global economic development poses the greatest risk to Latvia's growth.

 

Export of goods and services in 2015 will be close to the 2014 level. Russia's food embargo will continue to affect export growth, at least during the first half of 2015. Factors associated with the economic problems in Russia – the falling value of the ruble, investors' withdrawal from the region, weakening demand – will have an even greater impact on Latvia's export opportunities. On the other hand, improvements in the economic situation in the European Union, the largest market for Latvia, could have a positive effect on Latvia's exports.

 

Private consumption will continue to grow in 2015, mostly on the back of higher wages, although wages in Latvia will be growing slower this year than in 2014. Improvements on the labor market will also be moderate as compared to the past several years.

 

Investments in 2015 will still be affected by businessmen's cautious future expectations and commercial banks' conservative lending policies.

 

Private consumption will foster growth in services targeted at the local market – commercial services and retail trade. Industrial development, just like the overall economic development in Latvia this year, will depend on developments on external markets. Taking into consideration that the economic situation in the EU, Latvia's largest market, is steadily improving, and that Latvia's producers are actively trying to enter third countries' markets, the overall production volume this year could be higher than in 2014.

 

Unless the geopolitical situation in the region declines steeply, Latvia's economic growth could amount to 2% this year, believes the Economy ministry.

 

The ministry also notes that average annual inflation this year will be lower than in 2014, about 0.5%, provided that global food and oil prices do not increase sharply.






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