Analytics, Economics, EU – Baltic States, GDP, Inflation, Markets and Companies

In its latest global economic review Nordic Outlook, SEB says Latvia's economy will grow 3.7% and 3.5% in Estonia. Next year, Lithuania and Estonia's GDP will expand 3% each. Meanwhile Latvia's economy will grow 3.5%.

The average annual inflation will stand at 2.8% in Lithuania this year, according to the Nordic Outlook. Prices will rise 2.7% in Latvia and 3.2% in Estonia. Next year, inflation should stand at 2.5% in all three Baltic states.

While Estonia's 4.9% GDP growth surpassed all expectation, then the bank now expects that the growth will move closer to long-term potential. It will also be better balanced, driven by both domestic demand and exports. While many institutions have previously revised their forecasts upward, SEB is taking a slightly more cautious position in light of recent data and is leaving its GDP growth forecast unchanged at 3.5% in 2018 and 3.0% in 2019, the bank says in the fresh Nordic Outlook.

According to SEB, private consumption will increase 4.3% this year, but the impact of the income tax reform on the growth of consumption was weaker than expected, but many other factors support a continued increase in purchasing power.

SEB said that the growth of the harmonized index of consumer prices (HICP) is to amount to slightly over 3% this year, which is 0.2%age points less compared to the earlier forecast, and 2.5% in 2019.

Regardless of the fact that growth in manufacturing has been decelerating and export growth in March 2018 even fell to a minus, the SEB expects strong export growth of more than 4% both in 2018 and 2019.