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Monday 23.07.2018 | Name days: Magda, Magone, Mērija
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Swedbank: "fooling around" slows the recovery of Europe’s economy

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Martins Kazaks

“GDP growth rates will be slower in the future quarters. GDP growth increase will only become more rapid along with the recovery of Europe’s economy, which is likely to happen only near the end of 2013 if the “fooling around” scenario continues,” – predicts Swedbank Head Economist Martins Kazaks.

“Given Eurozone’s debt crisis and the balancing of Europe on the border of recession, it is expected that Latvia’s GDP growth will become slower in the future. However, this is not how the scenario plays out,” – says Kazaks, commenting the latest Swedbank monthly review data.

Strong export, lively consumption and weaker import are the factors that have been improving Latvia’s economic growth. Even in spite of the recession in Eurozone, it has been improving quarter by quarter and has become one of the strongest economies in the EU. It is known that growth reached 1.7% in Q3 of 2012 in comparison to the previous one and 5.3% against the last year’s period.

Exporters aggressively seek new opportunities to increase sales and increase export traffic to poorly used markets. Larger employment, growing wages and low inflation improve consumption growth, explains the economist.

“Market diversification for exporters has slowed the influence of Eurozone’s recession. Businessmen of other countries acted in a similar way, this is why competition will increase and Latvia’s export growth will become slower,” – predicts Kazaks.

At the same time he notes that household consumption is affected by higher income (employment and average wages grow, inflation reduces), stable attitude and, according to Kazaks, a daring refusal to make savings.

“Consumption rates cannot remain far from export dynamics for long in a small open economy with a low savings level. Even though consumption is expected to grow more rapidly than export, it is expected that the growth of consumption will also become more moderate in the near future, if only we do not see a rapid export increase,” – says the bank export.

Ref: 102.109.109.5004


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  1. JPR says:

    It is hardly up to infantile economists to decide the future course of Latvia. What does this person think, that these questions are a technical matter? What kind of insane arrogance!

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