2013-12-09 11:50:00 - New Country Reports research report from Business Monitor International is now available from Fast Market Research
Latvia's economic recovery will continue into 2014 and beyond, although we emphasize that strong headline real GDP growth is largely a result of statistical base effects. We see growing scope for the government to ease up on its long-held policy of fiscal austerity going forward.
We anticipate the moderation in consumer prices in Latvia to pick up slightly in 2014. We forecast inflation to average 0.7% in 2013 and 1.1% in 2014. Given the weak state of the domestic economy, we believe imported inflation will be a key driver of price pressures this year.
In line with our long-held expectations, Latvia will join the eurozone in January 2014, despite substantial opposition among the domestic electorate.
Full Report Details at
- www.fastmr.com/prod/751979_latvia_business_forecast_report_q1_20 ..
We have revised up our expectations for the current account deficit, which we now expect to arrive at 1.2% in 2014, from a previous forecast of 2.2%
Key risks 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.
Report Table of Contents:
Major Forecast changes
Key risks to outlook
chapter 1: political outlook
BMi political risk ratings
potential Frictions ahead
- With its path to the eurozone now cleared, the government's focus will now shift away from austerity and towards socially-motivated goals. However, the government is expected to maintain a conservative fiscal stance, which could create frictions with other eurozone members.
taBLe: poLitica L oVerVieW
Long- term political outlook
slower Growth and ethnic tensions Key themes to 2023
- The coming decade for Latvia will be marked by the scars of the global financial crisis of 2008/09. The country's governments will struggle to return the economy to pre-crisis growth and will pay the political and social price for this inability to promote growth and ease ethnic tensions.
chapter 2: economic outlook
BMi economic risk ratings
investment to accelerate in 2014
taBLe: GD p BY eXpenDiture
Balance of payments
external accounts still characterised By stability
- Latvia's external accounts remain among the most sustainable in the region, and we have revised up our forecasts for 2014, anticipating a current account deficit equivalent to 1.2% of GDP. We do not expect Latvia's entry to the eurozone in January 2014 to substantially alter the country's balance of payments dynamics.
taBLe: current account
euro adoption to ease austerity Drive
- With euro adoption secured, the government of Latvia will ease off its fiscal consolidation drive and maintain stable, low level deficits over the medium term. However, Latvia remains among the most fiscally conservative governments in Europe, and this will not negatively impact the stability or strength of public finances in the country. In fact, we view this as positive for medium-to-long term economic growth prospects.
taBLe: F isca L poLicY
euro adoption impact Likely Minimal
- Latvia's accession to the eurozone in January 2014 is unlikely to have any immediate economic impact, although over a longer-term horizon we remain sceptical of the relative risk/reward profile of joining the single currency.
taBLe: MonetarY poLicY
chapter 3: 10-Year Forecast
the Latvian economy to 2022
L- shaped recovery to usher in era of Below- trend Growth
- Following the three-year depression, we believe that economic growth will be more subdued over the long term. What is more, with domestic demand set to remain under pressure as the private sector accounts for its excessive foreign borrowing in previous years, the export sector will become an increasingly important driver of economic growth over the long term.
taBLe: LonG-terM Macroecono Mic Forecasts
chapter 4: Business environment
BMi Business environment risk ratings
Business environment outlook
taBLe: BMi Business & operation risK ratinGs
taBLe: BMi L eGaL FraMeWorK ratinG
taBLe: LaBour F orce QuaLit Y
taBLe: eMerGinG europe - annuaL FDi inFLoWs
taBLe: traDe & inVest Ment ratinGs
chapter 5: Key sectors
taBLe: Major port Data
other Key sectors
taBLe: FreiGht KeY inDicators
taBLe: pharMa sector KeY inDicators
taBLe: teLecoMs sector KeY inDicators
taBLe: FooD & Drin K sector KeY inDicators
russia autos sector Key indicators
latVia infrastructure sector Key indicators
chapter 6: BMi Global assumptions
unchanged outlook, But headline risks remain
taBLe: GLoBaL assuMptions
taBLe: DeVeLopeD states, reaL GD p Gro Wth, %
taBLe: BM i V ersus BL ooMBerG consensus reaL GDp GroWth F orecasts, %
taBLe: eMerGinG Mar Kets, reaL GD p Gro Wth, %
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