Latviski English По-русски
Sunday 23.10.2016 | Name days: Daina, Dainida, Dainis

Dombrovskis: Latvia’s economic growth is better than expected

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUEurope’s economy begins the fourth year of recovery and continues to grow moderately, which is mostly dues to consumption. The majority of the world’s economies, meanwhile, are experiencing major challenges. This serves to increase growth risks in Europe, as noted in the European Commission’s winter outlook.

Vice-President for the Euro and Social Dialogue Valdis Dombrovskis said: «Europe is continuing its recovery, with growth broadly in line with our previous forecast in autumn. We have to remain attentive. Europe’s moderate growth is facing increasing headwinds, from slower growth in emerging markets such as China, to weak global trade and geopolitical tensions in Europe’s neighbourhood. It is important to continue structural reforms that can help our economies grow, withstand shocks in the future, and improve job opportunities for our population.»

In regards to Latvia’s economic growth, Dombrovskis said: «Latvia’s economy demonstrates stable growth, which is better that what the EC had predicted in autumn last year. Instead of the previously predicted 2.4%, Latvia’s economy grew 2.7% in 2015. This year’s economic growth is expected to be 3.1%. Faster growth rates are related to the fact that Latvia’s economy successfully uses global conjuncture – low energy prices and low interest rates on international finance markets. Banks have begun providing loan services more actively to companies and households, which is important for the stimulation of the national economy. Internal demand and investments are the main economic growth engines. Latvia’s economic growth rate is significantly above that of the average in Eurozone and European Union (1.7% and 1.9% respectively). Latvia continues demonstrating the highest growth rates among Baltic States. For the first time since the end of the last crisis, unemployment in Latvia dropped to a single digit value – 9.9%. It is expected this positive situation will remain in 2016 as well, when unemployment is expected to drop to 9.2%. Latvia should continue using the beneficial state of its economy to realize structural reforms, which are an important factor for attracting investments and enhancing the country’s competitiveness.»

Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said: «The European economy is successfully weathering new challenges this winter, supported by cheap oil, the euro rate and low interest rates. Nonetheless, the weaker global environment poses a risk and means we must be doubly vigilant. There is more work to do to strengthen investment, enhance our competitiveness in a smart way and complete the job of fixing our public finances.»

Economic results of all member states were either positive or stable in 2015. It is expected that economies of all member states will have expanded by 2017. GDP growth rates will remain varied, which can be explained with structural changes and certain cyclic positions.

It is expected that private consumption will remain the main driving force behind economic growth this year and the next. Investment should also gradually benefit from increasing demand, improved profit margins, favourable financing conditions and gradually lower pressure to deleverage.

Employment should continue to rise modestly. Unemployment rates are set to continue falling, albeit at a slower pace than last year. The decline should be more pronounced in Member States where labour market reforms have been implemented. The unemployment rate in the euro area is expected to fall from 11% in 2015 to 10.5% in 2016 and 10.2% in 2017. In the EU unemployment should fall from 9.5% in 2015 to 9.0% this year and 8.7% next.

Eurozone’s total government budget deficit index will continue to decline, largely thanks to increased economic activity and lower interest expenditure.

In the euro area, the general government deficit is expected to have fallen to 2.2% of GDP in 2015 (EU 2.5%) and should fall further to 1.9% of GDP this year (EU 2.2%) and 1.6% of GDP in 2017 (EU 1.8%). The fiscal stance of the euro area is expected to become slightly more supportive to the economic recovery this year. In the EU, it is set to remain broadly neutral. The debt-to-GDP ratio of the euro area is forecast to decline from its peak of 94.5% in 2014 (EU 88.6%) to 91.3% in 2017 (EU 85.7%).

Annual inflation in the euro area was only slightly above zero towards the end of 2015, mainly due to a further drop in oil prices. Consumer price increases in the euro area are expected to remain very low in the first half of the year and should start picking up in the second half when the impact from the sharp fall in oil prices abates. For 2016 as a whole, euro area annual inflation is now forecast at only 0.5%, partly because wage growth remains subdued. Inflation is expected to pick up gradually and to reach 1.5% in 2017 as higher wages, higher domestic demand and a moderate pick-up in oil prices increase price pressures.

Given the deterioration of the global economic outlook, the recovery of the global economy (excluding the EU) is now forecast to be slower than expected in the autumn. In fact global growth in 2015 is set to have been at its weakest since 2009. Euro area export growth should accelerate over the course of 2016 following a moderation in the second half of 2015. This is due to lagging effects from the euro’s past depreciation, lower unit labour costs, and a gradual increase in foreign demand.


Leave a reply

Four teachers in Latvia are paid wages that exceed EUR 2,000

In September 2016, the biggest teacher’s salary paid in Latvia with bonuses was EUR 2,260.27, as LETA was informed by Education and Science Ministry.

Producer price level down 1.6% in Latvia’s industry

Compared to August, the level of producer prices in Latvian industry increased by 0.3% in September 2016.

SRS Tax Debt Enforcement Office director Cerneckis steps down

On Friday, 21 October, director of Latvian State Revenue Service’s Tax Debt Enforcement Office Kaspars Cerneckis submitted his resignation.

Bookmakers predict Sadurskis’ remainder in his post for the rest of the year

Latvian Education Minister Karlis Sadurskis has been forced to distance himself from political opponents and teacher trade unions because of criticisms regarding reduced wages caused by the teachers’ pay reform. Nevertheless, political support will keep the minister in his post, bookmakers believe.

Lithuanian military discussing deployment of long-range missiles

A senior Lithuanian military officer has on October 20 stated that Lithuania is considering the deployment of long-range missiles in the country in the framework of hosting a multinational NATO battalion in 2017.

Ukraine in joint declaration with Lithuania, Poland condemns WWII aggressors

The Vekhovna Rada of Ukraine has this week adopted a joint declaration with Lithuania and Poland attaching responsibility for World War II to Germany, the USSR and the international community’s «appeasement policy».

Saeima Budget Committee conceptually approves 2017 budget project

On Thursday, 20 October, Saeima’s Budget and Finance Committee supported the state budget project for 2017, the medium-term budget contents for 2017, 2018 and 2019 and 57 legal drafts associated with the project.

Facebook sorry for removing breast cancer informative video

Facbook has expressed apologies for the removal of a breast cancer informative video shared on the social network by a Swedish foundation.

Two of the last twenty three first refugees have left Latvia

The last two of the first twenty three refugees resettled in Latvia have left for Germany, as reported by LTV.

Pregnant woman in Italy dies after doctor allegedly refused to perform abortion

Police in predominantly Catholic Italy is investigating a case of a woman pregnant with twins dying after miscarriage.

Russia applies discount on transit from Belarus

Russian Railways has applied a 25% discount on petrol, diesel fuel and crude cargo transports from oil processing plants in Belarus to Russia’s north-west ports. With that, Russia has basically provided Belarus with tariffs equal to tariffs in Baltics.

The first container train headed for Riga departs from China

On Thursday, 20 October, Latvian Transport Minister Uldis Augulis, representatives from LDz and YXE International Container Train, multiple Chinese officials and Latvia’s ambassador in China Maris Selga saw off the first test container train from China to Riga.

Customs officials intercept hashish shipment worth EUR 2 million

Latvian State Revenue Service’s Customs Police intercepted and confiscated a shipment of more than 200 kg of hashish worth EUR 2 million, as journalists were informed by SRS Customs Police Director Kaspars Podins on Thursday, 20 October.

SA: Riga Freeport has only realized one of five of our recommendations

Latvian State Audit follows the development of the largest investment projects especially carefully, because the state does not seem to handle them all that well. Krievu Island project is one of the largest investment projects, because there is European Union finances invested in it...

Job seekers in Lithuania want Western salaries, employers dumbstruck

Although Lithuanian labour market is in desperate for workforce, but those willing to toil will nod to a job offer only if the pay is really big. So big that the country‘s hirers feel like grabbing their heads upon hearing the candidates‘ salary expectations.

Overall government budget decreased in 2015

In 2015, the general government budget deficit amounted to EUR 309.0 million or 1.3% of the gross domestic product, whereas the general government consolidated gross debt amounted to EUR 8 846.3 million or 36.3% of the GDP.

SP: claims about Motorola’s murderer are an attempt to show Latvia as the enemy

Latvian Security Police views claims that Donetsk military commander Arseny Pavlov, aka Motorola, was allegedly killed by a hired killer from Latvia named Marks Ozolins is nothing more than yet another attempt at information war aimed to demonstrate Latvia and its citizens and enemies.

Estonian President Kaljulaid not to ask state to pay rent

Estonia’s new President Kersti Kaljulaid will not ask the state to pay rent for using her home unlike the former head of state Toomas Hendrik Ilves did.

Every third coin with Milda’s image has made its way to Europe

Every third euro coin with Milda’s image has found its way to Europe. The proportion of those coins in Latvia is 71% of all euro coins in circulation, according to monitoring data compiled by Citadele Bank’s CBL Cash Logistics service.

Estonia plans to increase female proportion in military

Estonia has announced plans to triple female involvement in the country’s Defence Forces and to expand the list of units accessible to woman soldiers by 2018.

Pre-paid mobile card users to be registered as part of a plan to reduce grey economy

At the meeting of state secretaries on 20 October, a proposal was presented from the transport ministry to begin registration of mobile pre-paid card users.

Next year’s budget plan and other decisions viewed by Saeima this week

On Thursday, 20 October, the Saeima will gather for an extraordinary meeting, during which deputies will discuss the next year’s budget plan and 57 associated legal drafts.

European Space Agency attempts to re-connect to its Mars probe

The European Space Agency has lost contact with its Mars probe on October 19 shortly prior to its planned landing on the planet.

Klauss withdraws from SRS personnel selection process

Kristaps Klauss, executive directors of Latvian Forest Industry Federation, has decided to withdraw from State Revenue Service’s personnel selection process.

Lembergs to continue testifying in court at the end of October

Aivars Lembergs, who is accused of serious crimes, will continue testifying in his own criminal case on 31 October, as confirmed by Riga Regional Court’s press-secretary Raimonds Locmelis.