SEB: Latvia to be one of fastest-growing countries in Eastern Europe in next two years
2012-10-15 10:22:37
Latvia, which was hit the hardest by the economic crisis, will be one of the fastest-growing countries in Eastern Europe during the next two years, according to SEB banka's latest Eastern Europe economic review.
Russia and Poland, the region's heavyweights, will also be doing much better than many other Eastern and Central European countries, especially in the region's central and southern parts where the economies will be recovering very slowly after the current stagnation and downturn, writes LETA.
Increasing domestic consumption and competitive exports will help the Baltic countries to achieve impressive gross domestic product increases. According to SEB Group experts, Latvia's GDP will increase 3.6% in 2013 and 4.5% in 2014, Lithuania's GDP will grow 4% in 2013 and as much in 2014, whereas Estonia's GDP will increase 3% and 4% respectively.
SEB banka economist Dainis Gaspuitis said commenting the report that the region's development would nevertheless depend on global processes, while the global economy would recover by 2014 at the fastest.
Due to slower growth in the United States, the recession in the eurozone and the reducing growth in China, businessmen will have to consider other markets, for instance, Africa, Indonesia, Vietnam, and use the opportunities that are offered by these markets, said Gaspuitis.
The report notes that the Baltic countries' internal devaluation from 2008 to 2010 has been enough to restore their competitiveness. In the past few years, Latvia, Lithuania and Estonia have gained back what they had lost in exports.
The Baltic countries' progress is significant also when compared to the seven other Eastern European economies of the European Union, although Latvia's growth has been the slowest from 2005 to 2011. The Baltic countries' exports will remain competitive, however, experts are concerned about a comparatively high salary and price growth in Estonia.
The growth of Estonia is slower than of Latvia and Lithuania, because Estonia is affected by the frozen export markets more than its neighbors, productivity growth in Estonia is close to zero, while wages are growing 7% to 8% a year, threatening the country's competitiveness in the future, said Gaspuitis.
Seimas elections on October 14, when the Lithuanian government may change. Lithuania will most probably join the eurozone in 2015, while Poland does not yet have a specific goal, and 2016 may be the earliest when the country could adopt the euro, says the report.
SEB banka believes that Latvia will meet the Maastricht criteria and adopt the euro on schedule – in 2014. Lithuania's chances are much less certain due to the approaching SEB banka believes that Latvia will meet the Maastricht criteria and adopt the euro on schedule – in 2014. Lithuania's chances are much less certain due to the approaching Seimas elections on October 14, when the Lithuanian government may change. Lithuania will most probably join the eurozone in 2015 says the report.