bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 25.06.2018 | Name days: Maiga, Milija

Swedbank: oil price to rise significantly in the next two years

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe beginning of the year was not particular favourable for the global economy. Nevertheless, global economy continues its slow climb. Following expected minimums at the beginning of the year, oil price has begun to grown once more. This time, it seems the lowest point has been passed – oil price is gradually becoming higher, as concluded in Swedbank’s latest economic outlook.

Inflation is gradually becoming stronger. With that, there is no reason to expect more negative interest rates. In spite of the unexpectedly weak activity across the years, Latvia’s economy is expected to experience 3% growth in 2016 and 2017. Latvia’s labour market is warming up slower than previously expected – economic growth is mainly based on productivity growth. Meanwhile, employment mostly remains unchanged. Summer has yet to arrive for economic growth and the labour market, notes Swedbank economist Martis Kazaks and senior economist Lija Strasuna.

Although global economic growth has been weaker than expected, it is expected that it will gradually speed up. The US Central Bank will raise rates very carefully. The European Central Bank will continue printing money. Interest rates will be negative or close to zero for at least two years. Oil price will grow. Inflation will follow. This is why there is no reason to expect ECB to reduce refinancing rates. Eurozone’s private sector’s crediting gradually increases. Fiscal policy will gradually become more expansive, partially due to the costs related to the influx of migrants, especially in Germany. It is expected that Eurozone’s economy will grow this year and next year similarly to last year – around 1.5% – 1.6%. Global economic growth, on the other hand, may reach 3.2% this year and 3.7% next year, as mentioned in the outlook.

There are many potential risks for economic growth in Europe and the rest of the world. Those risks are mainly related to politics. UK’s possible exit from the EU, continuation of talks regarding Greece’s debt and presidential elections in USA only increase uncertainty. China remains the largest risk to global economic growth, economists predict.

«Our estimates suggest that the oil market will experience a turn and demand will become equal to supply. Overproduction of oil in the world has declined from approximately two million barrels a day to 1.4 million this February. It is expected that supply will no longer exceed demand by the end of the year. With that, oil price will grow significantly in the next couple of years. The average Brent oil price will be USD 43 this year and EUR 61 next year,» – experts say.

According to them, oil price rise will have a big impact on development markets, especially for oil exporters. For Russia, recession will end this year. Slow economic growth will begin in 2017. Russian rouble will grow in value. Nevertheless, it will grow more slowly than the oil price. This is because Russia’s economic growth will be very weak. Support from cheap currency will be necessary. Oil price growth will gradually start pulling inflation in the world up, gradually increasing inflation expectations, offering support and provide more room to maneuver for central banks. Inflation in Europe will come close to 2% in the second part of 2017. Debt burden will also become lighter.

«After the unexpected decline in January, when export value had dropped by 7%, Latvia’s export industry will begin to gradually recover. This will be largely because of better external demand (more stable growth in Eurozone, slow recovery in Russia and stronger rouble), as well as gradual exploration of markets in Africa and Asia. Labour costs in Latvia continue to grow,» – note the bank’s economists.

Creation of new jobs is currently in a state of stagnation. No significant climb in employments is expected in the next couple of years. Economic growth seems too slow to allow enterprises to increase the number of employees. Mostly companies satisfy moderate demand growth at the expense of productivity growth. It is a challenge to find qualified workers, considering that it is harder to employ previously inactive individuals or the unemployed (approximately 30% of job seekers search for work for more than two years). This is why companies continue to invest in equipment and machinery to reduce the number of employees or increase production volumes without increasing the number of employees. The proportion of job seekers has remained the same throughout the last three quarters in Latvia. Nevertheless, as labour supply continues to decline due to the demographic situation, the proportion of job seekers will continue to gradually decline (from 9.9% in 2015 to 8.3% in 2017). The level of activity of residents of working age will continue to grow. It seems wage rise has become slower in Q1, which complies with Swedbank’s previous outlook – gross nominal wage growth around 6% in 2016 and 2017. It still exceeds productivity growth rates, as noted in the outlook.

Latvia’s economic growth outlook has been reduced from 3.3% to 3%. This is because of slower export market growth. More powerful investment growth will be put off for a later time following delays with the realization of finances provided by EU funds. On the other hand, positive corrections are possible due to more powerful crediting and investment cycle, especially in 2017. Weak demand on export markets and instability in global economy remain the main negative risks for Latvia’s economic growth, experts say.

Ref: 102.109.109.7582


Leave a reply

Potential investors want ABLV Bank’s owned bank in Luxembourg

Several potential investors have voiced their interest in purchasing liquidated ABLV Bank’s owned ABLV Bank Luxembourg, says the bank’s liquidator Arvīds Kostomārovs.

Saeima deputy not called in to CPCB for repeated interrogation yet; avoids comments

Saeima deputy Askolds Kļaviņš has not yet been invited to come over to Corruption Prevention and Combating Bureau for a repeated interrogation. The politician said he may pick a lawyer to represent him only once he receives an invitation from CPCB.

EU introduces sanctions against Myanmar security officials for Rohingya crackdown

The European Union, acting relation to what sees as systemic human rights violations against the Rohingya people in the South-East Asian country of Myanmar, will introduce sanctions on seven security officials of the South-East Asian country.

Evidence in criminal case at risk in ABLV Bank’s self-liquidation process

Sergei Magnitsky’s former employer, Hermitage Capital Management, sent a request to Latvia’s law enforcement authorities on 21 June 2018, asking them investigate money laundering in ABLV Bank.

Average school exam scores in Estonia too low for University of Tartu

Pupils at Estonian secondary schools have taken their state examinations this summer and their average results show that the average potential student would not qualify for the University of Tartu, the highest ranking higher education institution in the Baltics and Eastern Europe.

NCP member turns to corruption watchdog over Lembergs daughter’s offshore network

Member of the New Conservative Party and former worker of Corruption Prevention and Combating Bureau Juris Jurašs has submitted a request to the bureau, asking for an investigation of materials published by journalists about offshore network of the daughter of the suspended Ventspils Mayor Aivars Lembergs’, according to an announcement on social media.

Estonia experiences safe Midsummer festival as «bonfire guards» registered for first time

Estonian traditional Midsummer festival of Jaanipäev has been a weekend of active work to the the Estonian Rescue Board, which introduced the voluntary registration of bonfire guards this year.

Italy sees risk to Schengen area as it seeks EU-wide responsibility for migrant arrivals

The European Union's area of border-free travel could be in trouble if no solution is agreed to the problem of cross-Mediterranean migration has stated Italy's Prime Minister Giuseppe Conte. At the informal meeting of 16 EU leaders in Brussels, Italy's new Prime Minister Giuseppe Conte called for shared EU responsibility for rescued migrants and penalties for countries refusing to accept quotas.

Police see no criminal violations in association’s words about «weapons unused at the right time»

Latvia’s Security Police say they found no signs of criminal violations in a statement released by Tēvijas sargi association regarding «a great purge» in Latvia and «weapons that went unused at the right time».

Erdoğan claims victory in Turkey's presidential election

The long-time leader of Turkey Recep Tayyip Erdoğan has received of over a half of votes in the first round of a presidential election to receive a new five-year term in power.

Weather to become summer-like again in Latvia this week

The beginning of the week will remain rainy in Latvia. However, as the anticyclone becomes stronger, precipitation will back off and air temperature will start gradually increasing. Weather will change again at the end of the week, as reported by Latvia’s State Environment, Geology and Meteorology Centre.

Week in Lithuania. Parliament makes first step towards disclosing ex-KGB agents

The Seimas of Lithuania on Thursday, June 21, backed an initiative by the opposition Electoral Action of Poles in Lithuania – Christian Families Alliance to disclose now classified information on former agents of the Soviet KGB who voluntarily admitted their collaboration.

BNN summary of the week: CPCB visit to Saeima; ministers survive no-confidence votes; DTV case ends with mild penalties

BNN offers a summary of this week’s topical news in a variety of categories: Ruling; Future; Trust; Measures; Calendar.

SRS uncovers numerous violations more than half of inspected companies

State Revenue Service’s Tax Control Office performed a total of 305 thematic inspections of employers in Latvia in Q1 2018. Authorities recorded violations in 171 inspections, according to information from SRS.

Third level pension plan deposit volumes reach new record value

Residents’ interest for pension savings remains high. The volume of deposits made to private pension funds in the first three months of 2018 has reached a new historic peak: a total of EUR 16.5 million has been paid to 3rd level pension accounts, which is 11.6% more when compared to the same period of 2017, as reported by Finance and Capital Market Commission.

Petrol station network in Latvia caught performing fraudulent activities with diesel fuel

State Revenue Service’s Tax and Customs Police have uncovered and put an end to a fraudulent scheme with diesel fuel performed by some network of petrol stations in Latvia, as confirmed by the service.

Kaimiņš: I believe CPCB is performing a political order

In the evening of Thursday, 21 June, Corruption Prevention and Combating Bureau released three people previously detained as part of a criminal process regarding possible illegal funding of KPV LV party – Saeima deputy Artuss Kaimiņš, his colleague Atis Zakatistovs, and businessman Viesturs Tamužs.

Latvia’s parliament conceptually supports new sanction regulations

On Thursday, 21 June, Saeima supported in the final reading amendments to the Law on International Sanctions and National Sanctions of the Republic of Latvia that are meant to improve sanction regime regulations to ensure efficient application of national and international sanctions, as reported by Saeima press-service.

Storm in Tallinn floods streets, cuts Croatia-Argentina match short on TV

A rain storm has hit northern Estonia on Thursday, flooding some streets in the capital Tallinn, damaged buildings and badly affected the broadcast of an interesting World Cup game.

American banks tested for financial stress show positive results

The U.S. has performed banking stress tests and found that the 35 largest banks operating in the country have enough funds on hand to sail safely through a severe financial crisis.

Saeima fires judge for coming to work in a drunken state

On Thursday, 21 June, Latvia’s parliament supported the proposal to dismiss Rezekne Court judge Arvis Garais from his post. 71 deputies voted in favour, no one abstained and no one voted against.

UK to have three requirements to EU citizens willing to remain in UK

For citizens of the European Union willing to continue living in the UK after the country leaves the bloc, they will have to submit applications and answer three key questions over the internet, according to the country's interior minister.

Weather in Latvia to be rainy and cool during Ligo; next week’s weather to be dry and hot

Weather at the end of the week in Latvia will be dictated by a cyclone. Because of that, there will be instances of rain on Ligo. Weather is expected to improve next week, however, according to Latvia’s State Environment, Geology and Meteorology Centre.

Lithuania’s blood plasma corruption scandal extends to Latvia

The former head of Lithuania‘s National Blood Centre, suspected of corruption and involvement in unlicenced activity, received more bad news this week from Latvia, where investigators of the Lithuanian Special Investigation Service had questioned the Latvian Health minister, Anda Čakša.

Administrative burden to be reduced for foreign students and researchers

The administrative burden will be reduced for foreign students and researchers, as well as all education and research institutions hosting them. This is provided by the amendments to the Immigration Law approved by the Saeima in the third reading on Thursday, 21 June.