Latvia

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With the start of Russia’s war against Ukraine both consumer and business sentiment in Latvia plunged in March of this year. Since then, however, short-term data show that overall growth is still being supported by both domestic and foreign demand. The enormous rise in the price for energy but also for food products has pushed up the consumer price index significantly. Industrial production and activity in the private service sector were still growing considerably in the first half of 2022, while escalating prices of inputs resulted in a substantial decline of construction output. We have raised our GDP forecast for 2022 slightly, to 2.1% (from 1.4%), on the back of stronger external and domestic demand, with the latter driven also by unemployment falling to 6.8% in Q1 of this year. In 2023 we expect GDP to grow more robustly, by 2.3%, given an increase in public investment. The general budget deficit in 2022, at 5.5% of GDP, will be somewhat higher than previously expected, driven by anti-inflationary measures introduced by the government and higher defence spending.
        FORECAST*
Main Economic Indicators201920202021202220232024
Population, 1000 persons191419001883...
GDP, real change in %2.5-3.84.52.12.42.6
GDP per capita (EUR at PPP)217002099023030...
Gross industrial production, real change in %0.9-1.56.7...
Unemployment rate - LFS, in %, average6.38.17.67.05.86.0
Average gross monthly wages, EUR107611431277...
Consumer prices, % p.a.2.70.13.213.06.53.0
Fiscal balance in % of GDP-0.6-4.5-7.4-5.5-3.5-2.0
Public debt in % of GDP36.743.344.8...
Current account in % of GDP-0.72.9-2.9-3.8-1.9-2.0
FDI inflow, EUR m9758204581...
Gross external debt in % of GDP116.8124.8112.0...


Basic data are continuously updated.

* Forecasts are changed beginning of January, April, July and November.
See Press Conferences.

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Monthly Report No. 7-8/2022

Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Bernhard Moshammer, Olga Pindyuk, Sandor Richter, Bernd Christoph Ströhm, Maryna Tverdostup, Nina Vujanović, Zuzana Zavarská and Adam Żurawski
wiiw Monthly Report No. 7-8, July-August 2022
58 pages including 4 Tables and 21 Figures

Details

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Executive summary

Vasily Astrov
in: Overshadowed by War and Sanctions
wiiw Forecast Report No. Spring 2022, April 2022 , pp. I-VII
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