Swedes forecast steady Baltic growth

Despite the gloomy state of the world economy, the Baltic states are retaining their position as one of the fastest growing regions.

Although the global economic downturn is deeper than expected, its negative impact on Lithuania, Latvia and Estonia will be small, according to analysts from the Swedish bank Skandinaviska Enskilda Banken.

Increased private consumption and investment will sustain growth, while exports will weaken, according to SEB's latest "Baltic Outlook" report.

The Lithuanian economy is estimated to grow 4.5 percent this year and by 5 percent in 2003.

The Latvian economy should grow by 5 percent this year and by 5.5 percent next year, while Estonia's economy will grow by 4 percent this year and 5 percent next year, the report predicts.

Lithuania's gross domestic product grew by 5.7 percent in 2001, according to preliminary data from Lithuania's statistics department.

This compares with the 5 percent growth which SEB had forecast.

The Lithuanian Finance Ministry forecasts that the country's GDP will increase by 4 percent this year and by 5.1 percent in 2003.

SEB says export growth will slow this year and pick up slightly in 2003.

Imports, which rose by 15 percent in 2001, will grow at a relatively high rate this year and in 2003, mainly due to increased domestic consumption.

Lithuania's current account deficit fell to 4.5 percent in 2001 from 6 percent in 2000.

SEB forecasts, however, that the country's current account deficit will rise to 7 percent in 2002 before rising further to 8 percent in 2003 - a factor that will impede economic growth.

Inflation stood at 1.3 percent in Lithuania last year. SEB predicts it will rise to 2.5 percent this year and to 3 percent in 2003. Price rises are being driven by increased demand as well as higher excise taxes on fuel.

The Swedish bank echoes current thinking that the Baltic states will become members of the European Union in 2004 or 2005.