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Sunday 25.02.2018 | Name days: Alma, Annemarija
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Bank of Latvia President: inflation to form 2.7% this year

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, Bank of Latvia President Ilmārs Rimsevics

Bank of Latvia President Ilmārs Rimšēvics

The national economy development depends on global tendencies and the government’s decisions. The global economic crisis has not been completely combated yet, which is something politicians should take into consideration in order not to become too optimistic and keep cautious when planning the direction of the national economy, says the Bank of Latvia President Ilmārs Rimšēvics.

Upon commenting the latest data on the average inflation, the Bank of Latvia President stresses most of goods and services saw a price drop in 2010. Excluding food and energy resources price gains, Latvia still faced deflation. However, we must be ready slight inflation is expected in the following months, determined by both global tendencies and local decisions. The inflation will stabilize in the second half of the year, returning on the level of the previous year, thus 2.7% inflation is expected in 2011.

He points out this forecast has several upside risks – oil prices fluctuations, food prices in the global markets and more rapid external demand growth. External demand surged 14% last year and it will still be high this year – 6%. The labour market situation can also influence the risks in a long term, because the current demand for jobs does not meet the existing offer. The national economy shifting from real estate sectors to export, there will considerable changes in the list of the most demanded professions. Employers need specialists that are already lacking, despite the high employment. Such a situation can seriously intervene with further development of the national economy – we risk finding ourselves in a situation, when wages climb exceeds productivity.

Short term upside risks can also be propelled by the high inflation expectations due to the raised taxes, which might serve as an excuse to test the market (experiment, boost prices) for some businessmen. Similarly, talks about us soon coming back to the high inflation level can do that. The current development is moderate and no significant price gains are expected, on the contrary – the inflation is moderate and stabilizes.

Regarding the gross domestic product, the Bank of Latvia President forecasts it will surge 3% on average, although there are various risks that could hinder the development. He believes the most optimal economic growth would be 5%-6% a year, permitting sustainable growth.

However, Rimsevis stresses he does not want to speculate with such statements as assuring we can attain the average EU level, because it is more important to maintain sustainable growth than to boost it at a rapid speed.


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