EC cuts Latvia's GDP growth forecast

According to revised European Commission estimates, Latvia's economy will grow 2.8% in 2016, down from the winter forecast of 3.1%, with the pace picking up again in 2017, reported Latvian Radio Tuesday.

The projected growth cut was attributed to the external trade balance, as well as deteriorating outlook in construction and transit cargo services over the past months.

Domestic consumption is forecast to be the main force behind increasing growth, supported by rising income and low inflation.

The commission notes that while "investments are to some extent restrained by the slower-than-expected use of EU funds, [...]  bank funding is picking up after a very strong rebound in new loans in the second half of 2015."

However a "more significant acceleration" in investment is forecast for 2017 when "EU-funded projects are set to regain momentum". 

Unemployment is forecast to decline to 9.6% in 2016 and 9.3% in 2017.

The commission projects that the EU economy will grow 1.8% in 2016.

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