Courtesy of HD FestForest
December 15, 2014
Lithuania is set to become the fastest growing economy in the eurozone, according to new research.
The latest annual Eurozone Economic Growth Forecast from Ernst & Young (EY) has predicted the nation will overtake its Baltic neighbour Latvia next year, which is the country that has achieved the greatest progress in recent years.
Lithuania’s economy is forecast to expand by 4.5 per cent in 2015, compared to 3.4 per cent in Latvia. While it stands to be ousted as the fastest-growing economy, this still represents good progress for Latvia, as its growth has slowed down to 2.8 per cent this year. EY forecasts the nation’s gross domestic product will then rise to above four per cent in the medium term, reaching 4.2 per cent in 2018.
Regarding Latvia’s prospects, the organisation stated: “Export growth will drive the initial recovery and stay strong throughout the forecast period. Investment will also pick up more strongly from 2016, boosted by low interest rates and widening trade opportunities helped by Eurozone entry. And the current account will move into surplus in 2015, lessening reliance on capital inflows.
“The relaxed ECB monetary stance and an ongoing fiscal deficit will fuel faster inflation and wage growth, ensuring that consumer demand can rise, as well as household saving.”
EY also said political risks have eased in Latvia thanks to the increase of the ruling coalition’s majority in the most recent election. It predicted spending on defence and energy diversification projects is likely to increase in the coming years.
That both Lithuania and Latvia are set for impressive economic growth in the near future is good news from a forestry perspective, as the sector plays a prominent role in both nations’ economies.
Last month, figures released by the Latvian Forest Department of the Ministry of Agriculture revealed forest exports increased 11.3 per cent in the first nine months of this year, compared to the same period in 2013. Meanwhile, Lithuania accounted for 19.9 per cent of the €513.18 million worth of forestry products imported into Latvia between January and the end of September.