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Council: Estonia and Lithuania are one step ahead of Latvia fiscal discipline-wise

Jānis Platais/fiscalcouncil.lv.
Lately, Estonia and Lithuania have been one step ahead of Latvia in terms of fiscal responsibility, said chairman of Fiscal Discipline Council Jānis Platais in an interview to Latvijas Radio.

When asked how Latvia’s economic development looks when compared to other Baltic States, Platais said every country has its good and bad sides. Nevertheless, Lithuania and Estonia have accomplished better results than Latvia in measures to balance the budget.

He says that Finance Ministry’s GDP outlook for 2018 and 2019 is realistic, and Latvia’s economy could grow by 4% this year. Latvia’s economy grows at an average rate of 3% every year, which is more rapidly than the economy’s potential. According to him, development depends on several positive factors, such as good economic situation in the world and intensive realization of finances provided by the European Union.

Platais predicts that economic growth will have reached its peak in 2020 and 2021. After that, however, economic growth will slow down.

The head of the Fiscal Discipline Council notes that the economy is already showing signs of overheating. «The longer we save up our problems, the more quickly signs of macroeconomic unbalance and overheating surface,» said Platais. He added in his interview that no dramatic measures are needed at the moment.

As previously reported by Finance Ministry, Latvia’s economic growth rate is expected to be 4% in 2018, 3.4% in 2019, and close to 3% in 2020-2021.

Compared to previous predictions used for the preparation of the 2018 state budget, GDP growth rate has been increased by 0.6 percentage points for 2018 and 0.2 percentage points for 2019.

Increased speed of economic development is possible thanks to the beneficial situation in external markets and renewed investment activity in Latvia, as noted by the ministry. Under influence from these factors, Latvia’s GDP growth reached 4.5% in 2017, which was the most rapid rate since 2011.


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