Bank of Latvia forecast says GDP will drop by 4.7% this year

The Bank of Latvia has adjusted its forecasts for the development of gross domestic product (GDP) this year and next year, Uldis Rutkaste, head of the Monetary Policy Board of the Bank of Latvia said September 29.

Latvia's GDP drop will be 4.7% this year instead of the 7.5% estimated in June, while 2021's forecasted GDP growth of 5.1% is less than the previously predicted 6.7%.

Latvia's GDP (seasonally adjusted data) is expected to grow by 5% in 2022. This forecast is the same as in June.

The Bank of Latvia has also adjusted its forecast for average consumer prices this year and the next two years.

The bank predicted in June that consumer prices would remain unchanged in 2020, but inflation at 0.2% is estimated to be in line with the latest forecast this year.

Next year, inflation in Latvia will reach 1.4% (June forecast – 0.2%), while average consumer prices in Latvia will rise by 1.8% in 2022 (June forecast – 1.3%).

Unemployment forecasts have also changed. In June, the Bank of Latvia forecast that the number of the unemployed will reach 9.6% of the economically active population this year, but according to the latest forecast, unemployment will reach 8.1% this year.

The President of the Bank of Latvia Mārtiņš Kazāks said that the “lowest crisis point” in the Latvian economy is behind us. “At the moment we have a recovery phase,” Kazāks said, noting that the situation on the labor market is better than estimated.

He said though that the latest forecasts don't include individual potential risks.

 

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