European Commission predicts strong growth for Latvia

Latvia's economy is set to be one of the best-performing in the European Union over the next couple of years, according to latest predictions from the European Commission released November 9.

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"The confluence of thriving consumption, greater foreign demand and a strong rebound in investment is set to push Latvia’s GDP growth above 4% in 2017. Once the initial boost from the investment recovery wanes, growth should ease but remain over 3% in 2018 and 2019, due to strong consumption and improving external demand," the Commission says in its Autumn 2017 forecasts, released in Brussels.

"The shrinking labour force will continue to drive down unemployment and stoke wage pressures. Inflation is likely to average around 3% in 2017 and stay thereabout in 2018 and 2019 on the back of rapid wage growth. The government deficit is expected to be contained at 1% of GDP in 2018 and 2019 despite the large costs of tax reforms,"a summary of the report (attached) on Latvia said.

Latvia's is part of a generally upbeat assessment of medium-term growth prospects by the Commission.

The euro area economy is on track to grow at its fastest pace in a decade this year, with real GDP growth forecast at 2.2%, substantially higher than expected in the previous spring forecast (1.7%). The EU economy as a whole is also set to beat expectations with growth of 2.3% this year (up from 1.9% in spring).

The European Commission expects growth to continue in both the euro area and in the EU at 2.1% in 2018 and at 1.9% in 2019 (Spring Forecast: 2018: 1.8% in the euro area, 1.9% in the EU).

 

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