The European Commission (EC) forecasts an economic decline of 5.6% this year in Latvia, which is smaller than the average in the European Union (EU), but larger than in the other Baltic countries, said Valdis Dombrovskis, Executive Vice President of the European Commission and Trade Commissioner.
Household consumption and exports are expected to decline the most. It is forecasted that next year the Latvian economy will recover relatively rapidly, with the economy growing by 4.9%. This is a faster growth rate than the EU average and also the fastest growth in the Baltic States.
In turn, inflation in Latvia is estimated at 0.3% this year, but next year the harmonized consumer price index is forecast to rise by 1.3%.
Latvia’s budget deficit is projected at 7.4% of GDP this year, due to income and liquidity support measures, as well as declining tax revenues. The deficit is projected to fall to 3.5% of GDP next year.
The EC forecasts that Estonia’s GDP will shrink by 4.6% this year and grow by 3.4% next year.
In Estonia, deflation is estimated at 0.5% this year, but inflation is forecast to return to 1.4% next year.
In Lithuania, the EC expects GDP to fall by 2.2% this year, but to grow by 3% next year. Inflation in Lithuania is forecast at 1.3% and 1.5% this year and next.
The EC’s autumn economic forecasts estimate that the EU economy is expected to contract by 7.4% this year, but will grow by 4.1% next year, while the eurozone economy will decline by 7.8% this year and return by 4.2% in 2021. amount.
“Additional funding for the European and Latvian economies will be provided by the funding provided for in the economic recovery plan, which will be available after the coordination of the Member States’ economic recovery plans,” Dombrovskis added.
Inflation in the EU is expected to be 0.7% and 1.3% this year and next, respectively, while in the euro area it is estimated at 0.3% and 1.1%, respectively.
The EC forecasts a fall in GDP for all EU member states this year. In the bloc, the EC expects the sharpest economic downturn this year in Spain (-12.4%), Italy (-9.9%), Croatia (-9.6%), Portugal (-9.3%) and Greece (-9%). According to the EC forecast, the smallest fall in GDP is expected in Lithuania this year, followed by Ireland (-2.3%), Sweden (-3.4%) and Poland (-3.6%).
The EC publishes two comprehensive forecasts and two interim forecasts (winter and summer) each year (spring and autumn). The interim forecasts include annual and quarterly GDP and inflation for the current year and the following year for all Member States, as well as for the EU and the euro area as a whole.
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