Analytics, Baltic States – CIS, Economics, Export, GDP, Latvia

A consistently high level of private consumption will be the main driver of growth, as government expenditure will also increase. Nordea points out that over the last six months, a positive trend has also been observed with respect to investments, and these should grow even more next year.

''While exports will increase, the corresponding indicators will not be strong. This will mainly be due to the geopolitical disagreements and the cautious environment of global investments. The ability to achieve even higher GDP growth will be prevented by the import of goods and services which, thanks to the purchasing power of residents, will continue to increase the trade deficit," says Nordea's economic specialist Gints Belevics.

According to Nordea, in 2015, Latvia has had the strongest gross domestic product growth amongst the Baltic States. Most probably, that growth will be about 2.4%, whereas in Lithuania it will be closer to 1.8%, and in Estonia – about 1.3%.

Meanwhile, Estonia's economic growth for next year is projected at 2.7%, but Lithuania's – 4%.

''In the first nine months of 2015, export levels to Russia from Latvia, Estonia and Lithuania decreased by 21%, 38% and 41% respectively. As a result, export growth has slowed considerably, especially in Estonia and Lithuania. Until now, the recession of Russia's economy and the imposed sanctions have had a comparatively lesser effect on Latvia, which explains the best performance by this country amongst the Baltic States. It is expected, however, that the negative effects caused by Russia will reduce in 2016. First and foremost, this will be due to the considerable decrease in the share of exports to Russia. Secondly, it can be expected that export to other markets will continue to grow, i.e. by 5–7%, which will significantly compensate the negative effects caused by Russia. Therefore, even if we assume that the economic sanctions will persist, the negative effects caused by Russia will be considerably smaller in 2016, as compared to 2015,'' the Nordea analysts go on to say.