Macro - Country Economic Forecasts - Latvia
We have boosted our 2023 GDP growth forecast by 0.6ppts to 0.5% as unexpectedly low winter energy import costs, allowing more resilient domestic demand, has averted the risk of further GDP declines. But industrial output is still set to fall sharply due to higher energy bills, subdued eurozone demand and the ongoing rise in the eurozone interest rates. A strong return to growth in 2024 at 3.4% reflects the improvement in investment conditions as inflation drops back towards ECB targets and interest rates start to fall, with stronger EU market demand underpinning recovery even if the Russia-Ukraine conflict drags on.
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