The Bank has revised down its GDP growth forecast for Estonia and Latvia. The Estonian economy is expected to contract by 0.8 per cent in 2024, down from a 0.8 per centage growth forecast in May 2024, while the Latvian economy is expected to slightly grow by 0.9 per cent, down from a 1.8 per centage growth forecast in May 2024 .
The Bank has revised upward its forecast for Lithuania, expecting the economy to grow by 2.3 per cent in 2024.
"Buoyed by robust private consumption, rising investment, and a recovery in services exports, the economy is expected to outperform its Baltic peers," said the EBRD.
The forecasts were published September 26 in the Bank’s Regional Economic Prospects report, which envisages growth in the EBRD regions to pick up to 2.8 per cent this year, a 0.2 percentage point downward revision relative to the May 2024 forecast.
"The downward revision for Estonia and Latvia reflects, in part, sluggish exports due to subdued demand in the neighbouring Nordic region and declining growth in western Europe. Declining trade with Russia and Belarus, along with energy price fluctuations is further exacerbating the countries’ growth prospects," said the EBRD.
The report notes that economic performance in the wider region is "uneven, reflecting varying degrees of recovery and fiscal challenges, heavily influenced by a combination of weak external demand from advanced Europe and fiscal pressures, but also continued resilience in labor markets."
The Bank expects economic recovery for the three countries in 2025, driven by improved external demand and domestic investment, with GDP growth forecast at 2.5 per cent in Estonia, 2.4 per cent in Latvia and 2.5 per cent in Lithuania.
The EBRD recently had a sizeable team in Latvia to run a slide rule over the latest economic data.
