SEB AB, the second-largest lender in the Baltics, raised its forecast for gross domestic product in Estonia, Latvia and Lithuania this year and said improving domestic demand will boost economic growth in 2013.
GDP in Estonia, the newest euro-area member, may expand 2 percent this year and 3 percent in 2013, while both Latvia’s and Lithuania’s economies will grow 3.5 percent this year and 4 percent in 2013, SEB said in its Nordic Outlook today.
“Gradually rising domestic demand will cushion the three economies as the export engine sputters in 2013,” SEB said. “So far this year, consumption and capital spending have turned out to be somewhat stronger than expected.”
Baltic growth would reach its potential pace of between 4 and 4.5 percent in 2014, while the three countries will “continue to struggle with significant structural problems in the labor market,” the Stockholm-based bank said. It reiterated Latvia will probably adopt the euro in 2014 while Lithuania’s accession will be delayed until 2015.