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International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 09:05

Bank of Latvia raises GDP growth forecast for 2017 to 4.7%

BC, Riga, 18.12.2017.Print version
The Bank of Latvia has raised the GDP growth forecast for this year to 4.7% from 4.2%, Bank of Latvia Governor Ilmars Rimsevics told journalists on December 16th, informs LETA.

The central bank has also upped Latvia’s economic growth forecast for 2018 to 4.1% from 3.8%.

 

This year, Latvia has been showing faster economic growth than expected thanks to stronger external demand, largest investments and robust private consumption. The GDP growth forecast has therefore been raised to 4.7% from 4.2%, Rimsevics explained.

 

“Strong economic growth is expected to continue, but the growth rate will be slowing down on a more moderate growth of external demand and investment,” the Bank of Latvia governor said, predicting a 4.1% GDP growth for 2018.

 

Although Latvia’s economic growth continues to accelerate, increasing labor shortages are being reported along with investment growth and strengthening of purchasing power. This, in turn, means pressure on wages and prices, which leaves a negative effect on the competitiveness of Latvian businesses. Weaker competitiveness means that Latvia’s economic growth rate is likely to slow in the media-term, the head of the Latvian central bank said.

 

During the first nine months of 2017, Latvia’s GDP grew by 4.7% year-on-year at constant prices.

 

The Bank of Latvia projects Latvia’s average annual inflation to be 2.9% next year, Bank of Latvia Governor Ilmars Rimsevics told journalists.

 

The head of the central bank also indicated that the annual inflation forecast for this year has been left unchanged, at 2.9%. “The oil price dynamic has been slightly higher than forecast, but the euro currency’s rise against the US dollar compensated for this impact,” Rimsevics explained, adding that Latvia’s annual inflation is expected to average at 2.9% also next year.

 

In September, the Bank of Latvia projected Latvia’s average annual inflation for 2018 at 2.8%.

 

As reported, in November, Latvian consumer prices rose 0.1% against the previous month and climbed 2.7% against November 2016. The 12-month inflation rate, meanwhile, was 2.9% in November.

 






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