Analytics, Baltic Export, Economics, Latvia, Markets and Companies

As the export growth pace slows down, its positive effect on the national economy will also become more modest. Domestic demand will continue to gradually increase this year, however, the growth thereof will still be limited by households' significant debts and also the relatively high unemployment level, even with the improving situation on the labor market. The investment dynamics will be affected by banks' cautious lending policies, writes LETA.

Investments in the private sector will be determined by businessmen's expectations of future developments. Altogether, Latvian economy is anticipated to grow at least 3 percent this year.

In order to better substantiate the economic growth projections, various business associations and Latvia's largest producers were surveyed regarding their operations in 2011 and the first quarter of 2012, as well as expectations of 2012.

The surveyed businesses and business associations said that, after a successful last year, they expected their production or services volumes to continue to increase this year. They also said that export, the number workers at companies and their production volumes could also moderately increase this year.

Increasingly more companies are planning investments into the development in the near future. The surveyed associations and companies believe that the main limiting factors include the limited purchasing capacity on the local market, high prices for energy resources, difficulties in entering new markets, and lack of skilled workers.