International Internet Magazine. Baltic States news & analytics
Saturday, 22.10.2016, 22:42
Demographic trends are going to have the most significant impact on the Baltic real estate market in following years, Morten Hansen, the head of the Economics Department at the Riga Faculty of the Stockholm School of Economics, said at the Baltic Real Estate Leaders Forum today.
Keyword tags: Analytics, Demography, Direct Speech, Forum, Latvia, Market Review, Markets and Companies, Real Estate
According to the information from the Central Statistical Bureau, the turnover of Latvian external trade of goods in August 2016 increased by 8.5% month-on-month, with the goods export and import growing respectively by 9.9% and 7.4%. Compared to August 2015, the export value of goods increased by 9.7% and import value dropped by 0.7%.
Latvia is going to tumble into "a huge tax pit" in 2017 due to introduction of minimum social insurance contributions for employees which will mean a rise in labor costs, financial expert Agnese Pastare, the owner of PB Finanses accounting company, warned in an open letter to the Latvian top state officials, lawmakers, ministries and business organizations.
At the Äriplaan 2017 conference on Wednesday, Governor of Eesti Pank Ardo Hansson spoke of the increased share of labour-dependent sectors in the Estonian economy, which is also illustrated by the growth in wages in recent years. This means that the market is moving ever more decisively away from business models based on cheap labour.
This fall has been marked by numerous “jubilees”: 25th anniversary of restored Baltic States’ independence, re-opening of Nordic-Baltic diplomatic relations and flourishing of public diplomacy. The three Baltic States’ ambassadors in Denmark shared their views with the BC’s international editor on the countries’ present and further steps in streamlining mutual relations.
According to the data of the Central Statistical Bureau, in July 2016, the Latvian external goods trade turnover dropped by 2% month-on-month, with goods export and import dropping by 3.0% and 1.1% respectively. Year-on-year, the export and import value of goods dropped by7.4% and11.9% respectively.
This year, Lithuania’s economy expanded more than last year; however, deteriorating investments and the UK’s decision to leave the European Union (EU) will hinder economic growth. Increasing household income and the expected rise in domestic consumption will offset the negative factors.
According to the data of the Central Statistical Bureau, the consumer price level in August was slightly lower month-on-month, due to seasonal factors (by 0.7%), but remained the same year-on-year. The low inflation still reflects supply-side factors, slower economic growth does not create the conditions for the rise in demand and pressure on prices. Therefore, it is expected that in the coming months inflation, albeit positive, will remain low.
For a second consecutive quarter, weak investment activity has substantially impeded economic growth. The information published by the Central Statistical Bureau indicates that gross domestic product (GDP) in the second quarter grew only by 0.6% (seasonally and workday adjusted data at constant prices) quarter-on-quarter, with the year-on-year growth reaching only 0.8%. Compared to the flash estimate published in July, the quarterly growth has been improved by 0.2 p.p. It however, fails to substantially impact the annual projections of GDP, as the previous quarters have also been revised.
The growth rate of gross monthly wages slowed a little, especially in local government administration. Given that productivity declined in the second quarter, growth in the average wage remained strong. The Structure of Earnings survey indicates that the wage level in Estonia was second behind that of Slovenia among the Central and East European countries in 2014.
Over the last few years, the information and communications technologies sector (ICT) has been among those with fastest growth. It is no secret that in recent years rapid expansion of different ICT services could be observed in Latvia: programming, data storage, development of mobile applications, development of various complex ICT solutions, etc. However, unlike retail trade or manufacturing, the sector usually is not in the spotlight of economic analysts and policy makers. This can be explained by the size of the sector – ICT only accounts for about 5% of the total value added, even though this level is close to the European Union's average. Nevertheless, the success of the sector should be noted: it is one of the fastest growing, with high productivity levels, high average salary, implementation of latest technologies, and other positive features.
Employment improved despite slow economic growth Registered unemployment increased in Ida-Virumaa The work ability reform is expected to boost registered unemployment and the labour force participation rate.
There is a striking paradox in Washington's policy on European natural gas markets. US diplomats are undertaking tireless efforts to prevent Russia constructing new export pipelines, arguing these massive projects will deprive Ukraine of billions of dollars in annual revenue from transit fees, which could wreck the struggling country's economy. At the same time the United States continues to preach the mantra of energy efficiency and supply diversification, both of which will help reduce reliance on Russian gas in Eastern Europe. Washington wants to help end Ukraine's dependence on Russian gas, yet it is fighting to keep Kiev dependent on Russian gas income. This is not only contradictory, but it is the wrong way to go about helping Ukraine and the wrong way to advance European energy security and integration in the long run.
Currently, the attention of all those who work and conduct business in a united Europe is being paid to the behaviour of British authorities after Brexit. If the country withdraws from the EU, many thousands of companies incorporated in Britain are very likely to leave their legal motherland. And a certain share of this business can be bid for by Latvia.