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Economist: surge in construction causes Latvia’s GDP to go up

Dainis Gašpuitis/SEB
«Exceeding optimistic outlooks and in spite of developments in the finance sector Latvia’s GDP had growth 4.8% last year. This increase came largely as a result of a rapid surge in the country’s construction sector,» comments SEB Bank economist Dainis Gašpuitis.

The economist said ICT industry has also contributed to Latvia’s GDP growth. This industry has good potential, but it could suffer from shortage of workers.

«The year’s beginning outlined weak growth for global economy. Germany’s and Italy’s economic factor made dull Eurozone’s growth perspectives. The general mood in the economy remains influenced by many unclear factors, including tense trade relations between USA and China, Brexit and many other geopolitical events,» explains Gašpuitis, who adds that under these developments Latvia’s economic growth will soon become slower. The possibility of a Brexit with no agreement also presents risks for Latvia’s economy.

«Although risks and lack of clarity have increase, Latvia’s economic perspectives remain positive,» says Gašpuitis and mentions that EU funds will function as stabilizing factors. They will continue heating economic sectors and will improve investments.

EU funds will serve as stabilizing factors to help warm the construction sector and improve investments.

«The question about construction sector’s ability to increase output and efficiency to manage growing costs and maintain growth,» said Gašpuitis.

It is hard to predict changes in the transport and storage industry. However, looking at current trends, the economist allows for a positive development.

«The difficulties our trade partners are experiencing with development mean slower export growth, as well as weaker and more unbalanced growth in processing industry. Domestic consumption would be good support for the industry. Under such conditions, domestic consumption will be one of the main engines for economic activity,» said Gašpuitis.

The expert also predicts unemployment to go down more. However, conditions on the labour market will withstand pressure to increase wages.



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