
Latvian economic growth goes hand in hand with deficits and inflation
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.
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.
Third largest economy in the EU, with the emission of more than 800 gm of carbon dioxide per euro of GDP, where coal dominates the energy sector, with a 77% share in electricity production.
The 500+ policy seems to have had the political effects desired by the government, rather than solving economic and demographic issues.
Despite the employment rate among 15- to 64-year-olds at 75.2%, the country faces a shrinking workforce and regional disparities.
Unemployment has risen: consumption and investment face a higher level of uncertainty and a decline in capacity utilization induced by lower demand.
Private consumption will remain strong thanks to rising incomes, pension indexation, higher minimum wages and a vibrant labour market.
Latvian GDP growth fell by -9.2% and the current account deficit is on the rise. Loans to the private sector are held back by an extensive informal sector.
Tallinn’s GDP will fall by 4.5%, while in 2021-22 will recover with the rebound in private consumption and investment. Public debt remains the lowest in the EU.
Before the pandemic outbreak, the economy was expected to slow down slightly (+3%), with a decrease in exports and investments.