Inflation is here, but hope is hard to die
Latvia’s GDP growth estimates for 2021 have been revised upwards to 5.3%, as well as inflation which is expected to reach 5% by the end of the year.
Latvia’s GDP growth estimates for 2021 have been revised upwards to 5.3%, as well as inflation which is expected to reach 5% by the end of the year.
ING estimates strong price pressure due to the continued rise in fuel, food and energy. In August, PPI accelerated to 9.5% YoY.
The Latvian central bank indicates an increase in GDP of 3.3% this year and 6.5% in 2022. Budget deficit and inflation forecasts are revised upwards.
Energy prices are 22% higher and inflation will be maintained in the coming months by rising prices on the global market for raw materials and imported goods.
In the country, which became the fifth European economy with an average GDP of 4% in 2009-19, per capita income grew at a rate of 5.3%.
With consumer demand expected to rise, supply will struggle: businesses face rising commodities prices, lack of components and staff shortages.
The increase in tax burdens would fail to cover the promised reduction in the tax burden, causing more uncertainty and reduced investment.
While private consumption accounts for 58% of GDP, Warsaw’s economic performance depends less on exports than its regional partners.
The lack of investment weighs on real prospects and opportunities in the medium to long term, as private investment has been below the EU average for years.