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Thursday, 25.04.2024, 12:31
SEB reduces economic growth forecasts for all Baltic countries in 2014
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According to SEB, Estonia will see GDP growth of 0.5% this year, Latvia – by 2.9%, and Lithuania – by 3%.
SEB banka economist Dainis Gaspuitis told members of the press today that Latvia's economic growth forecast has been ''cut'' due to uncertainty, but that growth will remain relatively good when compared with other countries in the region. He said that the situation in Ukraine could slow down exports. ''New export markets must be found, and we must begin to think about alternatives,'' he said, adding that the Russian ruble was weakening already before the Ukraine crisis.
He said that it is still unclear what the impact the EU-Russia crisis will leave on Latvia's economy, but that the transit and tourism sectors could be the most affected. ''We will not remain an attractive destinations if the value of the ruble continues to fall,'' he said, adding that the Ukraine-Russia conflict could also impact investment activity in some sectors.
As reported, due to external factors, SEB's branch in Latvia SEB banka has lowered its 2014 GDP growth forecast for Latvia from 4.8% to 2.9%. The bank's 2015 GDP growth forecast for Latvia has been lowered from 4.8% to 3.4%.
Gaspuitis predicts that external developments and factors will have a negative impact on Latvia's economy this year. Positive whiffs from the euro area, however, are slightly reducing potential risks from the East, from Ukraine and Russia in particular.
For the Baltic States, Russia is one of the five largest export markets. It is also necessary to take into account that nearby markets, which are also important for Latvia, are closely connected. Russia's economic growth has been slowing down for a while, which means that the Ukraine-Russia conflict and potential sanctions can add to existing trends, creating an uncertainty regarding further export development, especially in the direction of Russia and nearby markets. Therefore there will be sectors which will slow down investment projects, explains Gaspuitis.
Nevertheless, investments will not stop, since the absorption of EU funds will maintain a considerable impact, adds the economist.
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