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War heats inflation on trade deficit and real growth
In Lithuania, the inflation rate reached around 11% in early 2022, and heating bills are expected to increase by 50% to 60%.
In Lithuania, the inflation rate reached around 11% in early 2022, and heating bills are expected to increase by 50% to 60%.
Following a record GDP growth (8.5%) in 2021, the Estonian economy will slow in 2022, still maintaining a strong pace (+4%).
GDP and consumption booms continue, but price-wage spiral too, as consequence of expansionary economic policy in recent years.
Riga is facing multiple challenges: energy prices, increasingly unemployed, a domestic market fall, global supply chain disruptions.
The example of Estonia suggests that the focus on an efficient allocation of resources works more effectively than a stimulus of demand.
NBP action lags behind other CEE central banks, while authorities pretend the elevated CPI to be a result of external supply shocks.
The risk of wage-price spirals is increasing in front of labour shortages, commodity prices, and the tax changes introduced in the new “Polish Deal”.
Estonia showed one of the fastest recoveries from the crisis with an economic growth of 8%. However, a slow down is now expected.
GDP growth projections for 2021-22 have been revised downwards, hit by shortages of materials, equipment, labour and rising energy costs.
In Latvia, real GDP has decelerated, hit by production and supply disruptions. The growth of purchasing power is uneven and exceeded by wages.