Head of the Bank of Latvia Ilmars Rimsevics told BNS that he believes that the GDP growth in 2014 will be largely similar to the growth rate in 2014. He believes that the growth cycle that started in 2011 is continuing, which is confirmed by the EC seeing Latvia’s economy as EU’s fastest growing for three years to come.

FinMin also believes that 2013 and 2014 will see the same GDP growth pace. This week FinMin revised the GDP growth forecast for 2013 and 2014 from previous 4% to 4.2%. Medium-term economic growth expectation remains unchanged at 4%. Inflation forecast for 2013 was lowered from 1.5% to 0.4%. FinMin believes that domestic consumption is going to determine most of economic growth this year, while in the medium term Eurozone recovery, the economy will become more balanced between exports, consumption, and investment.

At the same time in 2014 record-low inflation of 2013 will be pressured upwards by the liberalisation of the electricity market, higher excise duties on tobacco, as well as growing income increasing core inflation, FinMin believes.

Situation in the Eurozone and the development around the troubled domestic metallurgy major Liepajas Metalurgs are seen as the main risks to stable economic development.

Latvia’s EconMin expected GDP growth in 2013 and 2014 at 4.5%. The 2014 growth might be lower should the external environment not improve. External demand has affected the slowing exports in 2013, while improved domestic demand contributed to maintaining economic growth.

Previously this month the Bank of Latvia announced the revised macroeconomic forecasts. GDP growth in 2013 is expected at 4.1% vs. previous forecast of 3.6%. Inflation is seen averaging to 0.7% y/y this year vs. previous forecast of 1% (already cut once from initial 2% expectation).

According to the latest spring outlook by EC, Latvia’s GDP growth is seen by the European Commission at 3.8% y/y in 2013 and 4.1% y/y in 2014. IMF expects 4% of GDP growth in 2013 in Latvia.

The World Bank in its latest Global Economic Prospects sees Latvia’s GDP growth at 3.6% in 2013, 4.1% in 2014, and 3.7% in 2015. This made an improvement from previous January’s forecast of 3% for 2013. The WB estimates 2012 GDP growth at 5.6%.