Analytics, Economics, EU – Baltic States, Good for Business, Latvia

According to the latest OECD forecasts, Latvia’s gross domestic product (GDP) will rise 2.7% this year and next year compared to a 3.9% growth forecast for this year in the previous estimates released in fall.

Harmonized consumer price index is expected to grow 2.6% this year and 2.5% next year. Unemployment level in Latvia will be 7% this year and 6.8% next year, according to the forecast.

The OECD noted that the economic growth in Latvia is projected to decline as export market conditions worsen and the disbursement of EU funds slows. Robust household consumption will continue to support growth. High wage growth will gradually translate into rising inflation. Fiscal policy will be broadly neutral. More efficient tax collection is essential for financing higher spending on healthcare and better access to housing, education and training. The OECD welcomed the new government’s commitment to bolster efforts to reduce informality and fight economic crimes, including money laundering.

Estonia is projected to see the steepest economic growth among the Baltic states at 3.2% this year and 2.8% next year. Consumer prices are expected to rise 1.7% in 2019 and 2.3% in 2020. Unemployment will reach 5.3% this year and 5.4% next year, according to OECD.

Lithuania’s GDP growth is expected to be at 2.9% this year and 2.5% next year. Inflation is projected at 2.2% in 2019 and 2020. Unemployment level will be 5.9% this year and 5.8% next year.

The world’s economic growth forecast has been lowered to 3.2% this year and 3.4% year. In the euro area, the economic growth is projected at 1.2% this year and 1.4% next year.