Analytics, Baltic, Economics, GDP

Swedbank expects Estonia’s gross domestic product to grow 3% in 2012. Earlier the bank had expected the GDP growth of 2.7%.

Next year’s economic growth outlook, however, was downgraded; Swedbank expects Estonia’s economy to grow 4% while in its spring outlook the bank had expected a growth of 4.2%.

The outlook of the eurozone has deteriorated, but Lithuanian economy's growth will not slow down, says Nerijus Maciulis, chief economist of Swedbank.

"The eurozone's economy will shrink by 0.4%, the next year will be marked by stagnation so a tangible recovery can be expected only in 2014. The good news is that Germany and other key trade partners of Lithuania will manage to avoid recession. As a result, the effect of the debt crisis to Lithuania will remain modest," he said.

According to the expert, it is likely that the growth of Lithuanian economy, which in the second quarter of 2012 slowed down to 2.1%, bottomed out and will not keep on decreasing more.

"We do not change our forecast of the GDP growth for this year (3.3%). However, we believe that the next year's growth will reach 4.1% or by 0.2%age points than we predicted in April. In 2014, when the eurozone recovers from recession and stagnations and the global economy starts recovering too, the growth of Lithuania's economy will stand at 4.5%," Maciulis said.

"The main reasons for Lithuanian growth will remain unchanged from this year. The growth will be driven by household consumption and investment. Despite positive trends on the labour market, household consumption next year will increase at the same rate as now (3.5%)," the bank's chief economist said.

Swedbank forecasts that the growth of real earnings (adjusted for inflation) will be faster as in 2013 it will reach 1.8%, and 2% in 2014. Since this year's household consumption has been growing on restored old-age pensions, this effect will not be present in 2013.

Swedbank has raised Latvia's gross domestic product (GDP) forecast for 2012 to 4%, Swedbank economists informed reporters today.

In April, Swedbank predicted that the GDP will grow 2.5% this year.

Swedbank also forecasts that Latvia's GDP will grow 3.5% in 2013 and slightly more than 5% in 2014.

The bank estimates that consumer prices will increase 2.5% this year, 2.5% in 2013 and 3.5% in 2014.

As reported, according to a flash estimate from the Central Statistical Bureau, Latvia's GDP increased by 5.1% in the second quarter of 2012, compared to the second quarter of 2011, according to seasonally non-adjusted data.