The OECD predicts the second fastest economic growth among the Baltic countries for Latvia this year

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.

The OECD expects Latvian gross domestic product (GDP) to grow by 2.3% this year.

For the Latvian economy, on the other hand, a recession of 0.2% is expected next year and a growth of 2.3% for 2024.

In June, the OECD forecast that Latvia’s GDP will grow by 3.5% and 1.6% this year and next year, respectively.

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, the OECD forecasts the fastest economic growth in the Baltic states at 2.5% this year, while next year and 2024, respectively, it is expected to increase by 1.6% and 2%. This year, an increase in consumer prices in Lithuania is estimated at 18.8%, next year an increase of 11.9% is expected, and in 2024 an 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 forecasts GDP growth of 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.

In the USA, on the other hand, the OECD forecasts GDP growth of 1.8%, 0.5% and 1% respectively.