This year Lithuania will grow by 2% and accelerate to more than 3% in 2025-26 driven by consumption and exports. However, risks arise from demographics and taxation.
The Estonian economy remained in recession in the first quarter, but Eesti Pank is more optimistic about the second half of the year as export rebounds.
In Poland, the increase in core inflation remains a problem. The return of market electricity prices won’t leave room for rate cuts.
Difficulties in repaying loans can be a serious worry for households and businesses as the risks coming from Sweden are still high.
Timid manufacturing alongside a recovery in demand indicates weak exports, while pro-social government policies pump wages at the expense of productivity.
The IMF recommends that getting competitiveness back on the track of growth needs decisive fiscal consolidation and increasing productivity.
In Poland, the MPC will stick to its cautious approach and refrain from monetary easing this year: CPI inflation will start climbing again.
Latvia’s economy is projected to be sluggish: labour costs present risks to growth and competitiveness, while fuelling inflation.
Additional problems arise when the state softens the recession, widening the budget deficit with additional money into the economy.
Lithuania’s optimism assumes a rapidly increasing household real income: will wages keep rising faster than prices with no consequences?