Expert: average wage in Latvia to hit 1,000 euros per month in 2-3 years

The average net monthly wage in Latvia may grow to EUR 1,000 in the next two or three years, SEB Banka's macroeconomics expert Dainis Gaspuitis said at the presentation of the latest SEB Nordic Outlook May 21, reported the LETA news agency.

He said that based on current trends the average gross monthly wage could reach EUR 1,000 in the second or third quarter of this year but the average net monthly wage might grow to EUR 1,000 in two or three years' time.

Wage growth in Latvia in the coming years will be steeper than in the neighboring Baltic states as the average gross monthly wage is expected to grow 8.3 percent in Latvia this year and 7.2 percent in 2019.

In Estonia, the growth is estimated at 5.8 percent this year and at 5.3 percent next year, and Lithuania is likely to see a 7 percent increase of the average gross monthly wage in both 2018 and 2019.

According to Gaspuitis, Latvia's problem is the wide gap in the average wage between different regions, for example, the capital city Riga and the eastern Latvian province of Latgale. Although the average net monthly wage in Latvia will grow to EUR 1,000 in the next few years, it is not going to happen in Latgale, and people are likely to drift from eastern Latvia to the capital city in search for the better-paid jobs.

Latgale has the highest unemployment rate in Latvia, and the economic trends do not suggest that the jobless rate in eastern Latvia could shrink to the level in other Latvian provinces, the SEB Banka expert said.

SEB in its latest Nordic Outlook has lowered Latvia's GDP growth forecast for this and next year. SEB analysts have cut Latvia’s economic growth forecast to 3.7 percent from 4.1 percent for this year, and to 3.5 percent from 3.7 percent for 2019. Latvia's annual inflation forecast for 2018 and 2019 has been left unchanged, at 2.7 percent and 2.5 percent respectively but unemployment is likely to drop by 2 percentage points this and next year to 6.8 percent in 2019.

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