Latvia risks losing position as fastest-growing Baltic economy: survey

This year, Latvia's neighbor, Lithuania, might beat Latvia to claim the title of the fastest-growing economy in the Baltics, according to a new business confidence survey released by Latvia's Citadele Bank.

Presenting the latest Citadele Index on Wednesday, the bank's economist Martins Abolins said while Latvia had been showing the fastest growth among the Baltic states in the past two years, business confidence in Lithuania now appeared stronger than in Latvia.

For the first time, the Citadele Index revealed differences between Latvian and Lithuanian entrepreneurs' outlook on their business environment and prospects.

The value of the business confidence index in Latvia reached 49.45 points, which means it stayed in negative territory, as 50 points mark the line between optimism and pessimism. The index's value in Lithuania, meanwhile, was 51.15 points, an indication of a generally upbeat outlook.

Business confidence across various sectors of the two Baltic economies differed significantly, with Lithuanian builders showing much more optimism in contrast to the Latvian construction sector where pessimism has been prevailing since 2014.

Latvian producers, however, are now showing renewed confidence, whereas manufacturers in Lithuania are somewhat pessimistic. While services providers in Lithuania appear to be fairly confident about their business prospects, the outlook of Latvian services providers remains slightly pessimistic.

The deepest pessimism, however, prevails among retailers both in Latvia and Lithuania, with retailers' mood in Latvia having worsened over the last quarter, the Citadele Index shows.

Economy ministry under-secretary of state Raimonds Aleksejenko admitted Latvia's economic growth had indeed been slowing in the first months of this year. At the end of May, the ministry downgraded its GDP growth forecast for this year to 3.0 percent from 3.2 percent. Endit