Baltics Outlook | Recovery in full swing
CEE Economies Special Report , 30. Juni
Despite restrictions in place throughout 1Q21, Baltics performed better than expected. Retail and manufacturing sectors are back to pre-crisis level and bode well for this year’s recovery. GDP growth should reach around 3% this year and should accelerate to above 4% mark in 2022.
Following a relatively mild contraction last year compared to other EU27 countries, the European Commission expects GDP growth to reach 2.8-2.9% in Estonia and Lithuania, and up to 3.5% in Latvia in 2021. Economic growth is expected to accelerate toward 5-6% in 2022 in Latvia and Estonia, and to reach around 4% in Lithuania. The economic recovery this year will be broad-based, with pent-up demand boosting household spending, while EU funds should fuel investment growth more visibly starting from 2022.
As 1Q21 GDP growth surprised to the upside, Estonia and Lithuania are already back to their pre-pandemic levels, while Latvia should reach it by mid-2022. The available real economy data for 2Q21 points to an ongoing recovery, with the retail and manufacturing sectors back to 4Q19 levels and economic sentiment above the long-term average. While economic activity is back on track, labor markets will need a bit more time to catch up. The unemployment rate will remain elevated across the region this year and will land at 7.9% in Estonia, 8.2% in Latvia and 8.3% in Lithuania. A more visible improvement is expected only in 2022.
Following a relatively mild contraction last year compared to other EU27 countries, the European Commission expects GDP growth to reach 2.8-2.9% in Estonia and Lithuania, and up to 3.5% in Latvia in 2021. Economic growth is expected to accelerate toward 5-6% in 2022 in Latvia and Estonia, and to reach around 4% in Lithuania. The economic recovery this year will be broad-based, with pent-up demand boosting household spending, while EU funds should fuel investment growth more visibly starting from 2022.
As 1Q21 GDP growth surprised to the upside, Estonia and Lithuania are already back to their pre-pandemic levels, while Latvia should reach it by mid-2022. The available real economy data for 2Q21 points to an ongoing recovery, with the retail and manufacturing sectors back to 4Q19 levels and economic sentiment above the long-term average. While economic activity is back on track, labor markets will need a bit more time to catch up. The unemployment rate will remain elevated across the region this year and will land at 7.9% in Estonia, 8.2% in Latvia and 8.3% in Lithuania. A more visible improvement is expected only in 2022.