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.