Last year, unemployment decline and economic growth were noticed in most EU member states. This development was reflected in nominal purchasing power indexes, which had increased by an average of 3.7% in the European Union in comparison with the year before.
Latvia’s purchasing power growth grew by 6.6% in 2015, which was the biggest growth among Baltic States (+4.9% in Lithuania and +5.2% in Estonia). Thanks to growing employment, Latvia’s purchasing power per capita grew to EUR 6,527.
Stable retail trade store business continued growing in 2016 as well. In its outlook, survey company GfK slightly increased development for EU member states to an increase of 1.1% (based on euro nominal value). Especially positive development is expected in Romania (+7.2%). Good development is also expected in Baltic States (from+3.6% to +4.9%). Powerful dynamic development is also expected in retail stores in Sweden (+4.8%) and Spain (+3.7%). As for Baltic States, the highest turnover growth rate is expected in Estonia (+4.9%), followed by Latvia (+4.5%) and Lithuania (+3.8%).
In 2015, European residents enjoyed low energy and fuel costs, as well as good economic situation and personal welfare increase in many European countries. Industries, except for retail trade, benefited the most from these positive changes. As a result, the proportion of retail trade in private consumption continued to decline in 2015. The average index in the 28 EU member states is 30.4%. Because consumers have more money left for purchases, they mostly spend this money on services, travel and leisure activities, not retail trade sector. The proportion of retail trade in private consumption was 34.5% in 2015 (33.8% in Lithuania and 44.2% in Estonia).
Consumer prices remained unchanged in 2015. In February 2016, the European Commission predicted price increase of 0.5%. This was caused by expansive policy of central banks, economic growth and reduced prices for raw materials. Deflation was noted in many European countries in 2015. In 2016, on the other hand, the European Commission predicts consumer price decline in Slovenia (-0.3%), Romania (-0.2%) and Bulgaria (-0.1%). Latvia is expected to experience inflation growth of +0.4%.
«In total, 2015 was a good year for European consumers,» – says Dr. Gerold Doppelbauer, manager of GfK. «Economy of the European Union grew by 4.7% and unemployment in member states decreased in most countries. Private consumption increased considerably – low interest rates made traditional savings less attractive. With that, many consumers chose in favour of spending their money, which benefited retail trade. There are major differences among Europe’s regions. In addition to positive development, there is also political and economic uncertainty. It is still necessary to observe the readiness of European companies and consumers to invest their money and the influence of the refugee crisis and the threat of terrorist attacks on economic development.»