Analytics, Economics, EU – Baltic States, Latvia, Markets and Companies

In forecasts published in June, the OECD estimated that the Latvian economy would shrink by 8.1% this year.

In turn, the economic growth forecast for next year has been reduced from 6.3% to 2.4%, but for 2022 an increase of 4% is estimated.

According to the OECD, consumer prices in Latvia will increase by 0.1% this year, but by 0.4% next year. In turn, the unemployment rate in Latvia, according to OECD estimates, will increase from 8.4% this year to 8.8% next year.

The OECD notes that Latvia's fiscal policy has helped avert a much more severe downturn and this will continue to support the recovery. In addition, the strong fiscal position allows the government to provide additional assistance to households and businesses if needed.

For Lithuania, the OECD forecasts a 2% drop in GDP this year, while the Lithuanian economy is forecast to grow by 2.7% next year. Previously, the organization predicted a 8.1% decline this year and a 6.4% increase next year. The organization forecasts a rise in consumer prices in Lithuania this year of 1.2%, and next year - 1.5%. According to forecasts, the unemployment rate in Lithuania will be 8.8% this year, and 8.1% next year.

For Estonia, the OECD forecasts the sharpest economic downturn in the Baltic States this year at 4.7%, but growth is expected to be 3.4% next year. In June, a decline of 8.4% and an increase of 4.3% were forecast, respectively. This year, consumer prices in Estonia are estimated to fall by 0.7%, and next year will increase by 1.3%. Unemployment in Estonia, according to OECD estimates, will reach 6.8% this year and 7.6% next year.