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TALLINN - Swedbank, the Baltic region’s largest lender, raised its 2013 economic-growth forecasts for Estonia and Latvia, citing a better outlook for private spending and investment, reports Bloomberg.
Estonia’s economy will probably expand 3.3 percent this year, compared with a January forecast of 3.1 percent, the Stockholm-based bank said on April 10 in an e-mailed report. Latvian gross domestic product may advance 4.3 percent, up from a previous 4.1 percent estimate. Swedbank left its Lithuanian growth projection unchanged at 4 percent.
The three Baltic economies grew at the fastest pace in the European Union last year as they recovered from the world’s worst recessions after Lehman Brothers Holdings Inc.’s 2008 collapse burst a property bubble and shut off credit flows. Latvia plans to become the euro area’s 18th member next year to boost investment and trade after Estonia joined in 2011. Lithuania is aiming to adopt the currency in 2015.
Inflation may slow to an average 3.3 percent this year in Estonia, 1.1 percent in Latvia and 2.5 percent in Lithuania, Swedbank said. Estonia’s economic growth will accelerate to 4.2 percent next year, while Latvian GDP will increase 5 percent and Lithuania will expand 4 percent, it predicted.
Estonian officials raised next year’s economic growth forecast as exports resume their expansion and wage growth boosts domestic demand. Gross domestic product will probably expand 3.6 percent in 2014, more than last August’s 3.4 percent forecast, the Finance Ministry said on April 4 in an e- mailed outlook. It kept this year’s projection at 3 percent.
Estonia, which adopted the euro in 2011, has weathered Europe’s debt crisis as Swedish and Finnish demand for its electronics and wood products help its economy continue to recover. GDP expanded 3.2 percent last year, the European Union’s third-fastest pace behind Latvia and Lithuania.
The budget deficit will probably widen to 0.5 percent of GDP this year from a preliminary 0.3 percent in 2012, the Finance Ministry said. That’s less than the 0.7 percent shortfall set in this year’s budget. The gap may be 0.1 percent in 2014, the ministry said.
Consumer prices will probably rise an average 3.4 percent this year, less than the 3.5 percent advance seen in August and last year’s 3.9 percent increase, according to the ministry. Inflation may slow to 2.8 percent next year, in line with the previous forecast, it said.