The latest economic outlook from the European Commission (EC) indicates that Latvia’s GDP will have grown by 1.9% this year.
At the same time, the autumn outlook published on Friday, 11 November, states that Latvia’s economy will have dropped by 0.3% next year and 2.6% in 2024.
This year’s inflation in Latvia is estimated at 16.9%. In the next two years the consumer price index in the country is estimated at 8.3% and 1.3%, respectively.
EC explains that the growth of Latvia’s economy was negatively impacted by the surge of inflation and slower global economic growth rate. The doubling of energy prices prior to the start of the heating season forced households to lower consumption. The situation may partially recover after the end of the heating season. However, until then, the external environment will maintain a negative effect on Latvia’s exports.
Latvia’s budget deficit is expected at 7.1% of GDP this year, 3.4% next year and 1.3% in 2024.
Aside from Latvia, EC expects GDP growth in Lithuania – where it is expected to increase by 2.5%. The country’s GDP is expected to increase by 0.5% next year and 2.4% in 2024.
For Estonia the commission expects a GDP drop of 0.1% this year and GDP growth of 0.7% next year and 2.1% in 2024.
EC’s economic outlook for autumn estimated that the economy of the European Union will have grown by 3.3% this year, 0.3% next year and 1.6% in 2024. The economic outlook for Eurozone is 3.2% this year, 0.3% next year and 1.5% in 2024.
Inflation in the EU this year and the next two years is expected at 9.3%, 7% and 3% respectively. In Eurozone, according to outlooks from the EC, inflation is expected at 8.5% this year, 6.1% next year and 2.6% in 2024.
This year the EC predicts GDP growth for all EU member states except Estonia. The most rapid economic growth is predicted for Ireland (+7.9%), Portugal (+6.6%), Slovenia (+6.2%), Greece and Croatia (+6% in both). The lowest GDP growth, according to EC, is expected in Luxembourg (+1.5%), Germany (+1.6%), Slovenia and Latvia (+1.9%).
EC reports that in the first half-year EU’s economy ended up in a very complicated situation. The global shocks caused by the Russian-Ukrainian war have increased inflation across the world. For the EU this impact is the biggest, considering the proximity to he war and dependence on supplies of Russian gas.