Bank of Latvia raises Latvia’s GDP growth forecast to 3.3% this year

RIGA – The Bank of Latvia has raised Latvia’s gross domestic product (GDP) growth forecast for 2017.

According to unadjusted data, Latvia’s GDP in 2017 might grow 3.3 percent compared to the previous forecast of 3 percent. In 2018 Latvia’s economy might grow 3.4 percent, said Bank of Latvia president Ilmars Rimsevics in a press conference today.

He said that at the end of 2016 and the beginning of 2017 Latvia’s national economic growth sped up, reaching a 4 percent growth in the first quarter of this year, which is the steepest growth in the past years. This has been thanks to a better situation in manufacturing, energy, and, starting from 2017, also in construction, trade and transport. Still, the growth has been determined by the low base earlier and several one-time factors that will not have such a large impact in the coming quarters.

The Bank of Latvia predicts that growth will be stable. The external economic environment is gradually improving, and Latvia’s manufacturing and foreign trade data also suggest of strengthening external demand. In addition, lending is recovering, and there are improvements recorded in the labor market – unemployment is reducing, wage growth is stable.

There have been delays in absorption of European structural funds, but it might activate this year and leave a positive impact on construction and related sectors, as well as investment activity, Rimsevics said.

The European Central Bank, meanwhile, raised its eurozone GDP growth forecast to 1.9 percent this year and 1.8 percent next year.