Analytics, Baltic States – CIS, Economics, Investments, Latvia, Markets and Companies, Ukraine

The report emphasizes that, the role of investments will become more important in order to secure stable growth. The high and maximum capacity loads observed in sub-sectors of industry confirm this, and show the need for investment. Private consumption contribution to the growth will gradually decrease with the decline in the employment rate.

The latest data indicates that the European economy is determined to return to positive growth. During the last quarter of 2013, positive growth was observed in eurozone and the entire European Union. Confidence indexes mark a continuation of this tendency in the first months of 2014 as well. Macroeconomic development scenario is based on the assumption that the situation in eurozone will continue to stabilize. With eurozone returning to its development, the external demand for Latvian export goods and services, and the activation of investment flow are to be expected, which will result in further development of the Latvian economy.

External threats are among the risks that can negatively affect the volume of Latvia's export. Developments in Ukraine, deceleration of Russia's economic growth, threat of low inflation in the EU, curbed development in China and other countries, and the changes in U.S. monetary policy, are among the main external threats. At the same time, the ministry emphasizes that the geopolitical risk in connection with Ukraine, is the most essential risk for Latvia's economic growth.

Internal factors will also affect the macroeconomic scenario's opportunities to attract financial capital, and to activate investment projects for improving production capacity, situation on the labor market, development of the lending sector, and other factors that directly affect the country's credit rating, interest rates, confidence indexes and internal demand.