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2019/11/04 / Erste Group Research

Latvia Special | Growth dynamics to bottom out next year


Economic growth so far disappointed this year. Flattening out of EU funds utilization dragged investment growth down, while exports were weak. Private consumption to drive growth next year.

After two consecutive years of robust economic growth, the Latvian economy visibly cooled in 1H19. GDP growth came in on average at a meager 2.4% y/y on the back of softer investment growth and weak export performance. The European Commission expects economic growth to land at 3.0% and 2.8% this and next year, respectively.

However, these forecasts seem quite optimistic. The flash estimate of 3Q19 GDP growth arrived at 2.8% y/y and, together with the weaker start to the year, calls into question the European Commission’s expectations. The deteriorating global outlook will likely weigh on export performance, while dropping sentiment will most likely downplay domestic demand.


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General information

AuthorErste Group Research
Date2019/11/04
Languageen
Product nameCEE Economies Special Report
Topic in focusMacro/ Fixed income
Economy in focus-
Currency in focus-
Sector in focus-
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