Economists project moderate growth for Latvian economy in 2020

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RIGA, Jan. 3 (Xinhua) -- The Latvian economy will probably continue to show moderate growth this year, with the country's gross domestic product (GDP) likely to expand by 2 to 2.5 percent in 2020, local media reported Friday, citing a survey of economists.

According to the economists' forecasts, 2020 might be quite similar to last year, with increased excise rates on fuel and alcohol expected to be the main driver of inflation this year.

Martins Abolins, an economist at Latvia's Citadele Bank, said that services prices, most probably, will continue to rise at the current rate, climbing three percent in 2020. With global food prices showing certain stability, food price inflation in Latvia should be down to one or two percent this year.

Meanwhile, residents' income growth will continue, although at a slower pace than over the last couple of years and reach an annual rate of six to seven percent, the economist added.

"We expect the average monthly gross wage to come close to 1,200 (euros) by the end of the year," Abolins said, adding that joblessness will keep dropping as well because the situation is stable enough.

Meanwhile, SEB Bank economist Dainis Gaspuitis pointed out that the cost of living in Latvia is unavoidably increasing and that purchasing power is not growing evenly for all income groups.

"The employed population's purchasing power will grow stronger and inflation will not be felt so strongly. For social groups with more children, purchasing power will grow much slower, as their income will not keep up with rising costs of living," the SEB economist said.

Laimdota Komare, an economist at Swedbank Latvia, noted that household utility and housing costs are expected to drop this year thanks to lower gas prices and reduced electricity distribution tariffs.

The Swedbank economist indicated, however, that fuel prices jumped already on the first day of 2020 and that higher excise tax will push up prices on alcohol in March. (1 euro = 1.12 U.S. dollars) Enditem

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