Latvian central bank revises GDP forecast downwards

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Latvia's central bank (Latvijas banka, LB) said June 18 it was revising its growth forecast for the country downwards slightly.

"Following staff presentation on the situation in the global and Latvian economy, the Council of Latvijas Banka decided to revise the macroeconomic forecasts... Latvia's gross domestic product (GDP) is expected to grow by 3.9% in 2018. The previous forecast of 4.1% was adjusted downwards to reflect  somewhat stronger than previously expected decline in Latvia's financial sector activity and the decreasing optimism in the external environment, partly offset by the solid performance of Latvia's economy reported in the first quarter. Latvia's GDP growth forecast for 2019 was revised downwards from 3.2% to 3.0%," the central bank said.

However, the inflation forecast for 2018 remains unchanged at 2.9%. For 2019, it was revised upwards by 0.3 percentage point, to 2.9%, reflecting higher oil prices.

"Annual growth in 2018 is expected to be slightly lower than in the previous year. The beginning of the year was marked by declining optimism in the external environment as well as heightening geopolitical risks. Additional obstacles to higher growth also emerged in the domestic environment, in relation to the developments in the financial sector. While there was a continuous decline of business activities related to servicing foreign clients in 2017, the decline is likely to accelerate in 2018 as a result of the stepped up efforts to eliminating business with risky customers and de-risking of the financial sector. Moreover, several sectors are facing supply side constraints and insufficient investment in production capacity could become a growth-dampening factor," the central bank added.

The central bank also said Monday it was releasing another collector coin, this one dedicated the the "Garden of Destiny." 3,000 examples will be minted and each one costs 50 euros.

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