Economics, Financial Services, GDP, Good for Business, Latvia

The Finance Ministry drew up its macroeconomic prognoses for a period until 2020 as it started work on Latvia’s Stability Program 2017-2020.

Preliminary estimates suggest that last year Latvia’s economic growth slowed to 1.6% due to delays in the inflow of EU funding as programming periods changed, as well as weak growth in Latvia’s neighbor countries.

The Finance Ministry believes that Latvia’s economic growth will pick up in 2017 as external conditions improve, the growth of the global economy and Latvia’s key trade partners quicken and investment starts flowing again into Latvia.

According to the European Commission’s latest forecast, global growth will increase to 3.4% this year as compared to 3% last year, which was the world economy’s slowest annual growth since the financial crisis. The economic growth of Latvia’s principal trade partners is project at 2.2% in 2017, up from 1.7% in 2016.

In addition to export and investment growth, Latvia’s economic growth will be also driven by steadily increasing private consumption, which in turn will be fueled by wage growth and dropping unemployment. Compared to 2016, public consumption will be growing at a faster rate as spending increases in areas like healthcare and education.

The European Commission’s latest forecast suggests that the Latvian economy is likely to expand by 2.8% in 2017 and 3% in 2018. The European Commission has projected slower growth for the Latvian economy based on a more cautious assessment of Latvia’s foreign trade prospects.