Moderate growth in coming years, predicts SEB

One of the Baltic region's major financial institutions, Swedish-owned bank SEB, said Tuesday that Latvia would be among the European Union's fastest-growing economies in the next few years, but against a generally sluggish growth background. 

In its latest 'Nordic Outlook' report, SEB said: "Conflicting forces will again dominate the Baltic economies during 2015. Not until 2016 will growth become more balanced."

"Consumption will remain the growth engine, as strong increases in households' real wages slow down only marginally and unemployment falls somewhat further." 

However, political uncertainty in the region would determine precisely how things shape up, SEB warned.

Exports and capital spending will recover slowly, however, since the Ukraine crisis, Russian zero growth and food import sanctions will continue to cast shadows over the Baltic countries during 2015.

"We expect some acceleration in growth after the 2013-2014 slump, which was deep in Estonia's case. Lithuania and Latvia will regain their position among the fastest-growing EU economies, yet their growth will be moderate in relation to the 3-3.5 per cent potential rate in the Baltics.

"Estonia will lag behind, not quite reaching 3 per cent growth in 2016, while Lithuania will grow the fastest with 4 per cent in 2016," SEB concluded. 

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