OECD has raised Baltic GDP forecasts; Latvia to see steepest growth

2017-06-07
LETA/TBT Staff

RIGA – The Organization for Economic Cooperation and Development (OECD) in its latest forecasts released on Wednesday raised the GDP forecasts for all three Baltic states, and Latvia is to see the steepest economic growth among its Baltic neighbors.

The latest forecast says that Latvia’s GDP will grow 3.5 percent this year and next year. In November OECD’s forecast for Latvia was 3 percent this year and 3.5 percent next year.

The harmonized index of consumer prices is expected to grow 2.8 percent this year and 2.3 percent next year, while unemployment will drop to 9.2 percent this year and 8.9 percent next year.

The OECD said in its report that the economic growth is projected to pick up in 2017. Stronger growth in the euro area and Russia will support exports, which, along with the disbursement of EU funds, will boost investment.

At the same time, household consumption will be robust, supported by strong wage growth. However, unemployment will remain high, reflecting regional and skill mismatches between workers and jobs. Higher energy prices will raise inflation somewhat and reduce the current account surplus, the OECD said.

The forecast for Estonia shows that its economic growth is projected at 2.6 percent this year, and 3.1 percent next year compared to the earlier forecast of 2.4 percent this year and 2.9 percent next year. Consumer prices in Estonia are expected to rise 3.2 percent in 2017, and 2.8 percent in 2018, while unemployment would grow to 7.6 percent this year and 8.4 percent next year.

OECD’s forecast for Lithuania suggests that its GDP will grow 3.1 percent this year and 2.9 percent in 2018 compared to November’s forecast of 2.7 percent and 2.8 percent respectively. Lithuania’s inflation is projected at 3.3 percent this year and 2.7 percent next year, while unemployment is expected to decline to 7.4 percent this year and 6.9 percent in 2018.

GDP in all OECD member state is projected at 2.1 percent this year and next year, while the world’s economic growth forecast is 3.5 percent this year and 3.6 percent next year. In the euro area the economic growth is planned at 1.8 percent this year and next year.