bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Tuesday 24.10.2017 | Name days: Renāte, Modrīte, Mudrīte

Swedbank: drop in transit cargoes will hold down Latvia’s growth

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUSlower export growth, largely because of slow global trade, decline of Russian exports through Latvian ports, and slower recovery of investments will slow down Latvia’s economic growth, as stated in the latest Swedbank economic outlook.

Growth is still expected, but it will be slower than expected. This year, Latvia’s economy will grow 1.6%. With assistance from structure funds in 2017, Latvia’s economic growth is expected to speed up to 2.6%. As lending services recover further in 2018, GDP growth may reach 2.9%. This is slow growth for Latvia, notes Swedbank Latvia senior economist Martins Kazaks.

Q3 2016 was certainly weaker than expected. Economy grew by 0.8% when compared with Q3 2015. GDP growth outlook for the year has been reduced to 1.6% (2.1% previously). The main reason for this lies in delays with EU funds, crisis in construction sector and residents’ overall cautious attitude towards spending money. Processing industry is still holding firm. Growth in this sector of the national economy is recorded at 4% when compared with last year; this is also demonstrated in export data. Current account is maintained in the positive. Retail trade growth has become slower – only 1.1% in Q3.

Crisis in construction came as a shock to the labour market – the number of employees has not grown (decline has been noted in the trade sector, creation of jobs serves to neutralize declines in other sectors). The decline of the level of unemployment is very slow, the economist explained.

«Next year’s growth will become stronger. This is because influx of money from EU funds will once again activate investments in infrastructure and production. Uncertainty about the external environment will likely drag the general mood down. We may not see any rapid breakthroughs in investments next year. Construction will likely pull out of recession thanks to investments. Employment will go up and unemployment will go down. Unfortunately, decline of transit cargo volumes is bad news for economy. As Russia diverts its cargoes to its own ports, the flow of cargoes through Latvia declines (Latvia’s railway infrastructure has experienced 17% cargo volume declines this year). It is unlikely that new cargoes will be secured in time to compensate losses. This means employment level in the sector will likely decline. Export volumes will continue to grow, but the decline of transit cargoes will hold down economic growth,» – Kazaks said.

Economic growth is expected to be slow in Lithuania (2%-2.8% annually) and Estonia (1.3%-2.5%). Influence of populism will also rise in Baltic States – it is clear from election results in Lithuania and government change in Estonia. Slow growth and inability to secure reforms aimed at providing production rise will force politicians to look towards more expansive fiscal policy. Latvia’s planned tax revenue rise (around 7%) is significantly ahead of the hoped nominal GDP growth rate (below 5%), according to Swedbank.  The government’s planned budget deficit (around -0.6% of GDO) for the medium-term budget of 2018 is unrealistic. The country’s ability to fit within the budget border will depend on the State Revenue Service’s ability to recover more money from grey economy. It is possible, but it will require structural changes for tax policy, as said by the bank’s expert.

Ref: 102.109.109.0091


Leave a reply

Estonian sexual harassment scandal spreading

The woman, who accuses former Estonian Prime Minister Taavi Rõivas of alleged sexual harassment during a state delegation trip to Malaysia has added more revealing details to her description of the events.

Family doctors dissatisfied with Healthcare Ministry’s reform again

When forming cooperation with family doctors, lately the Healthcare Ministry has focused on conditions that are completely unacceptable for doctors and had never been in place to begin with, said Latvian Family Doctors Association’s Chairman Pauls Princis in an interview to Rīta panorama programme.

Experts prepare a plan to defend poor residents’ interests next year

Poverty is a violation of human rights. Political will and specific decisions to reduce it are necessary. Allocation of state budget funds for the introduction of a sustainable social policy and realization should be considered an investment in people rather than state budget expenditures, says EAPN-Latvia.

New Google smartphones reported to have issues with screen

In the latest smartphones of U.S. internet giant Google, problems with screen have been noticed.

Latvia and Russia to sign final documents regarding state border demarcation

On Wednesday, 25 October, Latvia’s and Russia’s final border demarcation documents will be signed at the Foreign Affairs Ministry. These documents will include the demarcation map, border description, landmarks reports, landmarks coordination and altitudes catalogue, as well as the final minutes.

Stabbed voice of Ekho Moskvy expected to survive

The presenter of the Russian independent radio Ekho Moskvy, Tatyana Felgengauer, is expected to survive after she has been stabbed in the neck at the radio station.

Though vote-buying was proven, CEC decides to not change division of mandates in Saeima

The Central Election Commission has decided to not re-divide mandates in the 12th Saeima after Latgale Regional Court ruled that four votes were, in fact, bought in favour of Harmony’s candidate Andrejs Elksniņš.

Pabriks: losing control over airBaltic would be a mistake for Latvia

«If attraction of an investor for Latvian’s national airline airBaltic results in full privatization of the company, Latvian state would make a strategic mistake,» says MEP Artis Pabriks.

Another person may be involved in NSL and ZZS illegal financing case

Corruption Prevention and Combating Bureau’s launched criminal process regarding possible illegal financing of parties To Latvia from the Heart and Union of Greens and Farmers has identified another involved person.

Mortality from strokes in Latvia may grow significantly in the near future

To raise awareness of the dramatic situation with strokes in Latvia and motivate decision-makers into improving stroke prevention measures and treatment and increasing funding for this area, cardiologists and neurologists invite officials to come to a discussion.

Pavļuts: party unions would be welcome, but not for politically technical reasons

In preparation for Saeima elections, unions should be considered by parties that have similar goals, not politically technical considerations, said Kustība Par leader Daniels Pavļuts in an interview to Rīta panorama programme.

Minister: changes in Russian schools needed for formation of unified political nation

Latvia requires a unified political nation, which is impossible to achieve living in different education spaces. With that, it is only natural for the process to progress towards our youth studying together, Latvian Education Minister Kārlis Šadurskis told Rīta panorama programme about the intended education reforms in Russian-speaking schools.

Czech election won by party of police-sought billionaire Babiš

In the parliamentary election of the Czech Republic, which took place over the weekend, centrist party ANO has won. It is chaired by billionaire Andrej Babiš, who has been stripped of the immunity of a member of parliament over suspected wrongdoing in attracting European Union farming subsidies.

Rīgas satiksme limits competition; agreements prevent ‘others’ from entering the market

Competition Council believes Rīgas satiksme’s contracts with private companies limit competition, because they prevent other players from entering the market, as reported by De Facto programme of LTV.

Weather will be clear and dry in Latvia at first; set to change in second half of the week

On Monday and Tuesday weather will be dictated by increased atmospheric pressure – weather will remain clear and dry. Wind will draw in from the east and south-east, which will be strong along the coast in Kurzeme, as reported by Environment, Geology and Meteorology Centre.

Spain denies effort to strip Catalonia of autonomy amount to coup

The Foreign Minister of Spain, Alfonso Dastis, has dismissed claims that the effort of the central government to introduce direct rule in the separatist region of Catalonia can be considered as a coup d'état as it is seen in Barcelona.

TM: the ministry is open for a full disposal of state-owned airBaltic shares

Latvian Transport Ministry is currently engaged in reviewing specific offers for attraction of investors for airBaltic. A full privatization of the company is not out of the question, says the ministry’s state secretary Kaspars Ozoliņš.

Week in Lithuania. Election watchdog’s decision puts budget grants for Liberals in question

A total of 45,336 euros in the costs of the training organised by an Institute of Applied Politics owned by Sarunas Gustainis, a former MP and former member of the Liberal Movement, for the party should be recognised as non-monetary contribution, says a task force established by the Lithuanian Central Electoral Commission.

BNN summary of the week: birth and death rates in Latvia turn out shocking. Gambling halls to close down

BNN offers a summary of this week’s topical news in a variety of categories: Fight; Truth; Business; Future.

Professor: by taking money away from science, the state shoots itself in the foot

The matter regarding insufficient funding for science has recently become more topical in the public space. President of Latvian Academy of Sciences Ojārs Spārītis is rather critical of the situation: Latvia has lied to the European Union and European Commission about making sure that funding for science reaches 1.5% of GDP by 2020.

To prevent fraud, audit of MPC recipients to be performed in Latvia

Latvian Economy Ministry intends to perform an audit of mandatory procurement component recipients and use new regulations to combat fraudulent activities, as confirmed by Economy Minister Arvils Ašeradens.

Rail Baltic procurements to be processed using Electronic Procurements System

Following the changes to Latvian Republic’s Public Procurements Law, all new procurements for Rail Baltica administered by RB RAIL will be processed using a free electronic information system and its e-contest subsystem.

Estonian construction price index pushed up by wages

The construction price index in Estonia has in July-September of 2017 increased by 0.9% in comparison to second quarter this year and by 1.7% from July-September of 2016, Estonian statisticians have estimated.

Surplus of Latvia’s government budget reached 9.5 million euros in 2016

In 2016 general government budget surplus accounted for EUR 9.5 million or 0.04 % of the Gross Domestic Product, whereas general government consolidated gross debt amounted to EUR 10 091.6 million or 40.6 % of the GDP.

Latvia to invest EUR 5.9 million into formation of unified port network

Ports of Riga planning region and Kurzeme planning region have commenced an important tourism project. The goal of this project is creating a unified yacht port network in Latvia and Estonia with quality services that would allow developing sailing tourism and attract foreign sailing enthusiasts in the future, reports the regions’ representative Inese Ozoliņa.