Continued growth predicted

  • 2001-02-08
  • BNS
VILNIUS - The Baltic states are moving toward strong growth in 2001 and 2002, despite weaker international demand, economists from Sweden's Skandinaviska Enskilda Banken said in a recent report on the Baltic States and Poland.

The adverse consequence of the slowing in the U.S.A. and other markets will be limited for the Baltic countries and Poland. This is due to the low level of share savings in the countries, the small amount of exports to the U.S.A. and because moderate effects are expected in Western Europe.

Estonia's growth will be balanced during the period, the SEB report read. Recovery from the Russian crisis is attributable to higher exports. However, domestic demand has also developed favorably and investments are now accelerating. High unemployment is also a problem, according to the report. GDP will rise 5.5 percent this year and 5 percent next year. Political stability is foreseen through to the next parliamentary elections.

SEB projects Latvian GDP growth at 4.5 percent to 5 percent in the years immediately ahead. They noted that Latvia's economy had evenly distributed growth and low inflation. Exports have not increased as sharply as in the other Baltic states and a more austere fiscal policy is resulting in a slowing of the balance of trade deficit. At the same time, the political situation is unstable.

According to the SEB report, Lithuania is recovering slowly from the Russian crisis, with increased exports as the driving force. GDP is projected to grow by 3.5 percent this year and 4.5 percent next year. The risk of a change in government is high.

SEB is a major shareholder in three Baltic banks: Eesti Uhispank in Estonia, Latvijas Unibanka in Latvia and Vilniaus Bankas in Lithuania.