Analytics, Financial Services, Inflation, Latvia

According to the Finance Ministry’s forecast, Latvia’s gross domestic product (GDP) is likely to grow by 4.2% this year, which would be by 0.2 percentage points more than planned at the beginning of this year. The ministry said that the economy has been growing faster than expected thanks to strong performance in the first half of 2018, achieved largely thanks to an increased inflow of investment and export growth.

In the following years, the Finance Ministry expects investment growth to become more moderate, with Latvia’s overall economic growth also likely to slow down, stabilizing at the annual rate of 3%.

Latvia’s average annual inflation is projected at 2.5% both for 2018 and 2019, down 0.3 percentage points from the previous forecast made at the beginning of this year.

The stronger-than-predicted economic growth will also make unemployment drop faster than previously thought. The average unemployment rate is now projected at 7.7% for 2018 and 7.4% for 2019, down 0.3 percentage points from the earlier prognosis. Accordingly, the number of employed people will also grow faster, rising by 1.2% this year and 0.1% in 2019.

The average rate of wage growth is forecast at 8.3% for 2018, which means that the average gross monthly wage will reach EUR 1,003 this year. The wage growth forecast has also been upped by 0.3 percentage points.

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