Analytics, Economics, Financial Services, Latvia
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Saturday, 20.04.2024, 10:02
Finance Ministry cuts Latvia's economic growth forecast for 2020
As it is starting work on Latvia’s 2020 budget and the
medium-term budget framework, the Finance Ministry has updated its macroeconomic
and budget forecasts for 2020-2022.
According to the ministry’s latest prognosis, the Latvian
economy will growth by 3.2% this year. In 2020, the annual growth rate will
slow down to 2.8%. The new forecast for next year has been reduced by 0.2 percentage
points from the previous forecast. The GDP growth rate is expected to remain
the same also in 2021 and 2022, down 0.1 percentage points from the previous
prognosis. The latest estimates were drawn up in June 2019 based on Latvia’s
GDP data for the first quarter of this year and the short-term macroeconomic
information available in June 2019.
Finance Minister Janis Reirs (New Unity) commented
that after two years of strong economic performance, the growth rate has become
slower amid a stabilizing flow of investment, a slower growth of the global
economy and some one-time factors like a drop in electric power generation at
Latvia’s hydroelectric power plants and decreased activity in the real estate
sector.
Average annual inflation is projected at 2.8% in 2019 and
2.5% in 2020. Compared to the projections included in Latvia’s Stability
Program 2019-2022, the inflation forecast for 2019 has been raised by 0.3 percentage
points, primarily because of a steeper increase of energy prices and a weaker
euro. The inflation forecast for 2020 has also been raised by 0.3 percentage
points to 2.5%. For 2021 and 2022 the inflation forecast has been left
unchanged at 2.1% and 2% respectively.
The Finance Ministry expects the number of employed
residents to grow by 0.5% and unemployment to drop to 7% this year. Next year,
the number of employed residents is expected to remain stable and the unemployment
rate to slip to 6.6%. In 2020, the jobless rate is expected to be down to 5.7%.