There will be an economic decline or recession, but it will be shallow, said Bank of Latvia governor Mārtiņš Kazāks in an interview to LTV programme Rīta Panorāma on 23 September.
He explained that the Russian-Ukrainian war is a bad hit for Latvia’s and Europe’s economic situation. This is why the economy is slowed in Latvia and Europe as a whole.
According to Kazaks, there will be a recession, but it won’t be as deep as it was in the 2008 crisis. He said this is because currently Latvia’s economy does not have any serious internal problems.
The end of the year will be difficult, as residents and businesses can expect high heating bills, but the situation should improve in spring 2023.
The governor of the Bank of Latvia also stressed that it is also highly important to resolve the energy resource issue in a way to ensure there is enough for next winter.
In June 2022 the Bank of Latvia increased the country’s GDP growth outlook for the year from March’s 1.8% to 2.9%.
At the same time, the central bank also increased the economic growth outlook for 2023 from 3.2% to 2.4%. In June 2022 the Bank of Latvia predicted the country’s GDP growth to reach 4.2% in 2024, as opposed to 4.1% predicted in March.
In June the Bank of Latvia also increased the average inflation outlook for 2022 from 9.5% estimated in March to 14.8%. Inflation outlook for 2023 was upgraded from 3.7% to 7%. The annual inflation outlook for 2024 was increased from 2.1% to 2.4%.
It is planned for the Bank of Latvia to present the latest economic outlooks on 23 September.