OECD forecasts Latvia will be fastest growing economy among Baltic States
A recent report by the Organization for Economic Cooperation and Development (OECD) forecasts Latvia will have the fastest economic recovery among the Baltic States. In the latest release, the OECD estimates Latvia’s gross domestic product (GDP) will rise by 4.7% this year and by 3.9% next year. This compares favourably to previous OECD forecasts from May with an increase of 0.6% for 2018 and 0.3% for 2019.
The harmonised consumer price index in Latvia, as predicted by the OECD, will rise by 2.6% this year and 3% next year. Unemployment in Latvia is expected to be around 7.5% this year and 7.2% next year.
THE OECD also pointed out that Latvia’s economic growth is supported by consumer spending, which has been boosted by favourable conditions in the labour market. Following a difficult period during recent years, investment in the period 2017-2018 has increased sharply, with investors using the European Union’s structural funds.
For Estonia, the OECD forecasts economic growth of 3.3% this year rising to 3.5% next year. Consumer prices in Estonia will rise by 3.1% this year and by 2.9% next year with unemployment expected to remain static at 5.8% through 2018 and 2019.
In Lithuania GDP growth is expected to register 3.4% this year falling to 2.9% in 2019. The inflation rate will be hit 2.6% this year with prices expected to rise by a further 2.5% next year. The OECD believes that unemployment will fall slightly from 6.2% in 2018 to 5.9% in 2019 which is a move in the right direction.
Global economic growth is forecast to hit 3.7% this year and 3.5% in 2019. In the Eurozone economy has it owns challenges at the moment in the shape of Brexit and the Italian budgetary crisis. As a consequence Eurozone GDP growth of 1.9% is expected for this year and 1.8% next year.
Europe’s largest and most influential member state, Germany, is expecting economic growth of 1.6% this year and next although recent indicators suggested further short term weakness. Looking at Russia the OECD forecast GDP growth of 1.6% in 2018 and 1.5% next year. China should experience economic growth of 6.6% this year but will slow to 6.3% next year.
In the UK, which is about to leave the European Union, this year might be tricky with the OECD forecasting economic growth of just 1.3% rising slightly in 2019 to 1.4%. Meanwhile, in the U.S. the OECD expects GDP growth of 2.9% this year and 2.7% next year.