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IMF Improves Latvia’s GDP Forecast
By Latvian Institute
On October 7, the International Monetary Fund (IMF) has improved Latvia’s gross domestic product (GDP) forecast for 2010 and 2011, according to the latest IMF World Economic Outlook.
The IMF expects Latvia’s economy to shrink only 1% in 2010 as opposed to a 4% decline projected in April this year. According to the outlook, the Latvian GDP might grow 3.3% next year compared to the previous growth forecast of 2.7%. IMF prognosticates consumer prices in Latvia will dip 1.4% this year and edge up 0.9% in 2011. Previously the expected drop was 3.7% this year and 2.5% in 2011.
Dainis Gašpuitis, SEB Banka Macroeconomics Expert, told: “IMF is uncharacteristically optimistic in its forecasts, as they are much better than those of the local authorities. But the IMF scenario is realistic, and it would be no surprise if it came true. Next year, if the global economy does not experience any new shakes and continues to grow despite all threats, Latvia's GDP might increase more.”
Jānis Hermanis, Mortgage and Land Bank Financial Analyst, said the IMF projections were only informational and could change over the year. However, the latest adjustments show that the IMF has become more positive about Latvia’s situation and that the country’s reputation is improving in the eyes of the international lender: “If the forecasts come true, we could hope for smaller budget consolidation measures in numerical terms”.
