Analytics, Baltic States – CIS, Economics, GDP, Investments, Latvia

SEB banka economist Dainis Gaspuitis predicts that external developments and factors will have a negative impact on Latvia's economy this year. Positive whiffs from the euro area, however, are slightly reducing potential risks from the East, from Ukraine and Russia in particular.

For the Baltic States, Russia is one of the five largest export markets. It is also necessary to take into account that nearby markets, which are also important for Latvia, are closely connected. Russia's economic growth has been slowing down for a while, which means that the Ukraine-Russia conflict and potential sanctions can add to existing trends, creating an uncertainty regarding further export development, especially in the direction of Russia and nearby markets. Therefore there will be sectors which will slow down investment projects, explains Gaspuitis.

Nevertheless, investments will not stop, since the absorption of EU funds will maintain a considerable impact, adds the economist.