Latvia’s economy is expected to grow the fastest in the Baltic countries this year

The Organization for Economic Co-operation and Development (OECD) in the report published on Thursday predicts the fastest growth in the Baltic countries for the Latvian economy this year.

The OECD predicts that Latvia’s gross domestic product (GDP) will increase by 1.8% this year.

On the other hand, growth of 2.9% is estimated for the Latvian economy next year.

In November, the OECD predicted that Latvia’s GDP would increase by 1.9% and 2.7% this year and next year, respectively.

According to the OECD, the agreed consumer price index in Latvia will increase by 1.7% this year, and by 2.4% next year. On the other hand, according to OECD estimates, the unemployment rate in Latvia will be 6.7% and 6.6% this year and next year, respectively.

The OECD states that the drop in inflation and the increase in wages will contribute to the increase in income and consumption expenditure of citizens. State investments will increase thanks to the acquisition of European Union funds, while the decrease in interest rates will encourage investments in business and real estate. At the same time, exports will increase due to the recovery of key export markets. Core inflation will remain high amid strong wage growth amid labor shortages and increases in minimum wages and public sector pay. Meanwhile, rising geopolitical risks could hamper economic growth.

For Lithuania, the OECD predicts the second fastest economic growth in the Baltic States at 1.7% this year, while a 3.1% rise is expected next year. This year, an increase in consumer prices in Lithuania is estimated at 1.8%, and next year a 2.6% increase is predicted. On the other hand, according to OECD estimates, unemployment in Lithuania will be 6.8% and 6% this year and next year, respectively.

For Estonia, the OECD predicts a 0.4% drop in GDP this year, while next year the Estonian economy is expected to grow by 2.6%. The organization predicts consumer price increases in Estonia this year at 3.9%, and next year at 2.1%. The forecasts say that the unemployment rate in Estonia this year and next year will be 7% and 6.8%, respectively.

The OECD predicts that the world economy will grow by 3.1% this year, thus remaining unchanged compared to last year. Next year, the world economy is expected to accelerate its growth to 3.2%.

The organization notes that the global economy is cautiously optimistic, despite moderate growth and threats from geopolitical risks.

In the Eurozone economy, the OECD expects GDP to grow by 0.7% this year, and by 1.5% next year. Germany, Europe’s largest economy, is expected to grow by 0.2% this year, accelerating to 1.1% next year.

On the other hand, in the USA, the OECD expects GDP growth of 2.6% and 1.8%, respectively.