Analytics, Economics, EU – Baltic States, Financial Services, GDP, Latvia

The Finance Ministry will have to submit the document to the European Commission and Eurogroup by September 30.

The report says that, in the short term, Latvia's economic growth will continue to be driven by increasing private consumption, as well as development of exports and manufacturing. In addition, in the second half of 2015, Russia's sanctions introduced last August will no longer influence the financial indexes of Latvia in the year-on-year comparison.

However, the uncertain external environment will still hamper investments in Latvia, therefore growth pace will be moderate. According to the Finance Ministry's projections, Latvia's GDP growth, in comparative prices, will be 2.1% this year and 3% in 2016.

As the situation on the external markets improves and Latvian companies gradually switch to the faster-growing markets, economic growth will become balanced between external and domestic demand. The Finance Ministry forecasts that Latvia's GDP will increase 3.6% in 2017 and as much in 2018.

During the work on the general budget framework for 2016, the Finance Ministry consulted experts from Latvian commercial banks, International Monetary Fund, and European Commission.