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The ministry's latest GDP growth forecast remains unchanged from the previous forecast released in February. The inflation projection, on the other hand, has been raised 0.4 percentage points.

The Economy Ministry's latest Report on the Economic Development of Latvia says that Latvia's economic growth this year will still be closely associated with export opportunities and therefore with global economic development. Volumes of export of goods and services in 2015 will be close to those in 2014.

Improving economic situations in the European Union, the largest sales market to Latvia, could have a positive effect on Latvia's exports, as well as companies' ability to expand into new markets in third countries. At the same time, Russia's food embargo and the economic situation in Russia will continue to affect Latvia's exports.

The Economy Ministry believes that private consumption will continue to increase in 2015, mostly thanks to growing salaries, although wage growth will be slower than in 2014. Improvements on the labor market will also be more moderate than in the past several years. On the other hand, investments will continue to be affected by businessmen's wariness about future prospects and commercial banks' cautious lending policies.

Manufacturing development will also be closely connected to developments on external markets. The development will differ across various manufacturing sectors, and their growth will be mostly determined by changes in demand on the main export markets. The overall manufacturing volumes this year could exceed the 2014 level. Growth will continue in those manufacturing sectors where production volumes have been growing steadily, for instance, in wood processing, manufacture of electrical and optical products. Manufacturing amounts at the metallurgical plant KVV Liepajas metalurgs still remain uncertain, which will also impact the overall manufacturing output.

Meanwhile, increasing private consumption will foster the growth of retail trade and other sectors that mainly serve the domestic market. According to the latest statistical data, growth in the construction industry will be very moderate in 2015.

The Economy Ministry expects GDP growth to be around 2% in 2014.

The Economy Ministry also notes that moderate inflation is expected in 2015, and that the average annual inflation could reach 0.9%, provided that prices of food and oil products do not increase sharply.

The average annual inflation this year could be slightly higher than in 2014. During the first several months of the year, there were several factors, for instance, deregulation of the electricity market and higher public transport fares, that had a significant upward effect on consumer prices. At the same time, external factors – prices of oil and food products in the world – will continue to affect inflation.