Growth forecasts reduced to 3%

The European Bank for Reconstruction and Development (EBRD) lowered projections for the growth rate in Latvia’s gross domestic Product (GDP) to 3% for 2015, which is 0.7 percentage points less than the reduced estimates previously published in September. Growth rate expectations for Estonia and Lithuania were also brought down similarly, according to the EBRD Regional Economic Prospects report published Monday.

Among the eight countries listed among Central European and Baltic states, Latvia’s adjusted growth rate now is equal to that of Poland, and behind only neighboring Lithuania, which leads the group according to the current forecast.

The report said domestic demand was supporting growth in Central Europe and the Baltics (CEB), by helping to offset weaker exports as growth elsewhere in the eurozone remains anemic.

According to the report, the drastic plunge in oil prices worldwide is pushing Russia’s and other energy exporting national economies further into shrinkage, prompting further revisions of growth downward. To add pressure to the situation, the ruble’s depreciation is hurting countries with deep trade ties in Russia, like Latvia.

EBRD acting chief economist Hans Peter Lankes remarked that “even this forecast is subject to considerable risks,” because the uncertainty around the issues of oil prices and currency rates remains worrisome amid weak investor confidence.

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