The Organization for Economic Co-operation and Development (OECD) in the report released on Tuesday predicts the second fastest growth in the Baltics for the Latvian economy this year, with our gross domestic product (GDP) growing by 2.3 %.
On the other hand, the Latvian economy is projected to experience a 0.2% recession next year and is expected to grow again by 2.3% in 2024. In June, the OECD assumed that Latvia’s GDP will increase 3.5% and 1.6% respectively this year and next year.
According to the OECD, the Agreed Consumer Price Index in Latvia will increase by 17% this year, 10.7% next year and 5% in 2024. On the other hand, according to OECD estimates , the unemployment rate in Latvia will be 6.7%, 7% and 6.8% respectively this year and the next two years.
The OECD states that Latvia is negatively affected by the war started by Russia in Ukraine, as well as by very high inflation, which limits the consumption expenditure of the population. Business investment growth will continue to slow due to heightened uncertainty and worsening financial conditions, while high energy prices and lower external demand will weigh on industrial production.
For Lithuania this year, the OECD forecasts the fastest economic growth in the Baltic states at 2.5%.
An increase of 1.6% and 2% is expected for next year and 2024 respectively. This year the increase in consumer prices in Lithuania will be 18.8%, next year an increase is expected by 11.9% and in 2024 the increase in consumer prices is estimated at 4%. On the other hand, according to OECD estimates, unemployment in Lithuania this year will be 5.8%, but next year and in 2024 it will be at the level of 6.5% and 6.7%, respectively.
For Estonia, the OECD forecasts a 0.8% increase in GDP this year, a 0.5% increase in the Estonian economy next year and a 3.2% increase in 2024. The organization expects a increase in consumer prices in Estonia this year by 20.2%, and next year and in 2024 by 10.8% and 2.8%, respectively. Forecasts say that the unemployment rate in Estonia this year and the next two years will be 5%, 5.3% and 6% respectively.
The OECD expects global economic growth to slow to 3.1% this year and 2.2% next year, from 5.9% last year. However, in 2024, the world economy is expected to accelerate its growth to 2.7%, according to the OECD. The organization points out that due to the war in Ukraine, prices have risen significantly, especially for energy, thus creating an additional burden for inflation at a time when the cost of living in the world has already risen rapidly .
For the eurozone economy as a whole, the OECD expects GDP to grow by 3.3% this year, 0.5% next year and 1.4% in 2024. Germany, the Europe’s largest economy, it is expected to grow by 1.8% this year, contract by 0.3% next year and increase by 1.5% in two years. On the other hand, the OECD forecasts US GDP growth of 1.8%, 0.5% and 1%, respectively.
