The value of exports continues going up thanks to the rapid price growth, but the situation will change rapidly next year. It may even become diametrically opposed – manufacturing sectors will start exiting recession, and exports of goods in monetary terms will be reduced by the fall of prices, predicts Luminor Bank chief economist Pēteris Strautiņš.
BNN previously reported that in September 2022 Latvia’s export value accounted for EUR 2.137 billion. According to Strautiņš, exports remained high across the year in Latvia. However, in September the record line was passed thanks to the seasonal grain export wave.
Luminor Bank’s economist also predicts inflation to start slowing down next year.
«The evidence of inflation slowing down are rapidly piling up. Many groups of products can expect price drops. Wholesale prices of oil, gas and electricity have recovered from their peaks. If nothing extraordinary happens, the energy price drop will start around autumn next year and will be very tangible in 2024-2026.»
According to Strautiņš, since the summer of 2021 all sectors of the economy have grown rapidly in terms of numbers, stressing that the income growth of most people is behind the price increase. Nevertheless, he expects the situation with welfare to improve soon.
«We are gradually transitioning towards a different period – when large numbers or macroeconomic amounts change very fluidly and not always upwards. Households’ welfare will recover after the transient droop,» said the macroeconomics expert.
As for businesses, Strautiņš admits the period of high inflation was both difficult and successful for businesses.
«It was easy to raise prices. Real consumption has been strong, but it has also been difficult to manage work globally. The reason is because everything changes very rapidly, including the costs,» said the expert, adding that a period of relative peace could come very soon. During this period profitability of many will be negatively affected by the high level of hard-to-mitigate costs raised in the crisis, which includes labour wages.
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