Projections indicate that Latvia will experience low inflation (1.5%) and sluggish GDP growth (1.8%) in 2024.
"Although this year started with relatively strong economic expansion, such rapid growth is unsustainable and is expected to slow down in the coming quarters. In light of this, the overall GDP growth projections for 2024 remain unchanged at 1.8%, with the growth momentum in 2025 projected to be weaker than previously expected," the bank indicated.
The bank forecasts that inflation will remain low and maintained an unchanged forecast of 1.5% for 2024.
Over the next two years, inflation is projected to stand at roughly 2% (2.1% and 1.8% in 2025 and 2026 respectively). As the impact of energy prices on the average price rise diminishes, domestic factors are becoming more influential in driving price developments.
Macroeconomic fundamentals: Latvijas Banka's forecasts
|
2024 |
2025 |
2026 |
|
|
Economic activity (annual changes; %; at constant prices; seasonally adjusted data) |
|||
|
GDP |
1.8 |
3.3 |
3.8 |
|
Private consumption |
2.3 |
3.4 |
3.5 |
|
Government consumption |
4.2 |
0.7 |
0.1 |
|
Investment |
4.2 |
3.7 |
5.2 |
|
Exports |
0.6 |
3.3 |
3.4 |
|
Imports |
0.8 |
3.1 |
2.8 |
|
HICP inflation (annual changes; %) |
|||
|
Inflation |
1.5 |
2.1 |
1.8 |
|
Core inflation (excluding food and energy prices) |
3.6 |
3.3 |
3.0 |
|
Labour market |
|||
|
Unemployment (% of the economically active population; seasonally adjusted data) |
6.7 |
6.4 |
6.1 |
|
Nominal gross wage (annual changes; %) |
7.9 |
7.8 |
7.6 |
|
External sector |
|||
|
Current account balance (% of GDP) |
–4.1 |
–4.1 |
–3.6 |
|
Government finances (% of GDP) |
|||
|
General government debt |
44.5 |
45.5 |
46.0 |
|
Budget surplus/deficit |
–3.8 |
–3.5 |
–2.8 |
