2014-02-19 08:19:04 - Latvia Business Forecast Report Q3 2013 - a new country guide report on companiesandmarkets.com
Latvia´s economic recovery will continue into 2013 and beyond, although we emphasise that strong headline real GDP growth is largely a result of statistical base effects. Uncertainty and rising unemployment will also hit household consumption at a time when the government remains firmly committed to fiscal austerity.
We anticipate the moderation in consumer prices in Latvia to remain in place throughout 2013 before picking up slightly in 2014. We forecast inflation to average 1.0% in 2013 and 1.6% in 2014, down from an expected 1.9% in 2012. Given the weak state of the domestic economy, we believe imported inflation will be a key driver of price pressures this year.
The Latvian government´s commitment to joining the eurozone remains firmly intact, and we
view the government´s target date of 2014 as increasingly plausible. However, we expect that the Latvian public´s negative view towards the currency bloc will pose challenges for the government to convince the electorate. Nonetheless, we believe that the positive economic benefits accession will bestow on Latvia will tip the balances in the government´s favour.
Major Forecast Changes
We have revised down our inflation expectations, and now expect consumer prices to grow by an average of 1.0% in 2013 and 1.6% in 2014, from a previous forecast of 2.2% and 2.0% respectively.
We have upgraded our forecast for real GDP growth in 2013, which we now expect to arrive at 3.5%, from a previous forecast of 4.3%.
Key Risk To Outlook
The prevailing risk to our forecasts for Latvia remains the persistent eurozone sovereign debt crisis. A further deepening of the crisis would pose downside risks to most of our forecasts.The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
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