Latvia is getting closer to adopting the euro as slower inflation helps the Baltic nation meet a key criterion for the currency switch, Danske Bank A/S said.
Copenhagen-based Danske cut its 2012 inflation forecast for Latvia to 2.4 percent from 2.8 percent and lowered next year’s to 1.9 percent from 2.5 percent, according to a report e-mailed today. Consumer-price growth unexpectedly slowed to 1.6 percent in October, the lowest rate in two years, the statistics office reported after Danske’s projections were released.
“Latvia is getting closer to the euro every day,” Violeta Klyviene, a senior analyst at Danske, wrote in the report. Inflation “will continue to slow, positively influencing private-sector demand.”
Latvia plans to adopt the euro in 2014 after meeting debt, budget-deficit, interest-rate and inflation thresholds. Cutting the value-added tax by one percentage point in July helped tame price growth, according to Danske.