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Tuesday 17.07.2018 | Name days: Aleksejs, Aleksis
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Swedbank: Latvia will remain one of the most rapidly growing economies of EU

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUWith the global economy gradually recovering from the crisis, Latvia’s economic growth in the next couple of years will remain notably high – above 4%. Nevertheless, there is still much uncertainty in the world. Economic development depends on action or inaction of political leaders, Swedbank economists say.

Delays and indecisiveness to make painful decisions causes more harm to global economy in a shirt-term perspective. There will be serious fluctuations in the future – there is an upcoming gradual monetary stimulus termination, which is a challenging process. It is likely that it will not be very smooth. However, there is no need to panic – such short-term fluctuations is a normal thing for economic recovery, as mentioned in the bank’s economic outlook.

Economists leave the outlook for Latvia’s economic development unchanged – 4.3%. A strong rise in exports and investments is expected next year. These economic engines will be the main driving force of Latvia’s national economy. In 2015, a similar rate of economic growth is expected – near 4.2%.

According to Swedbank lead economist Mārtiņš Kazāks, economic growth above 4% is a good rate. Latvia will likely remain one of the leaders in EU. However, while 4% economic growth is returning to Europe, it is too low to allow Latvia to perform its national development plan in accordance with its motto “economic breakthrough”. Next year’s budget plan and medium-term budget content is fiscally responsible, but proposals lack ambition in order to rapidly and consequently contribute to medium-term growth. It is a good pre-election budget. However, it lacks ambition and structural change.

According to him, global economy is currently developing under indecisive policy. Global economic development depends on action or inaction of political decision makers. Errors and failures turn up every now and again. This delays economic recovery. One of the most resent set-backs is the inability of US democrats and republicans to reach an agreement on state budget.

Another challenge for political decision makers is the gradual termination of economic stimuli. It is expected that the Central U.S. bank will soon start gradually reducing procurement volumes of securities at the beginning of 2014.

Eurozone’s recession has ended. It seems the bloc’s economy is starting to recover. There are no longer any large differences between Southern Europe and Europe’s strongest countries. Businessmen and residents are gradually becoming more optimistic, economists say.

It is expected that Italy and Spain will start their economic recovery next year. The difference between growth rates of Europe’s north and south will likely reduce in 2015. Nevertheless, countries of Eurozone are still very different from one another. This makes it difficult to perform a united monetary policy.

Ref: 102.109.109.9422


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