The well-being of Latvia's residents is growing, but the financial situation in the country is not particularly impressive. The average salary in Latvia has risen to 1,835 euros per month, and the Bank of Latvia forecasts an 8% increase in wages in the coming years. This is reported by rus.err.ee.
As reported by the Estonian online publication, entrepreneurs are forced to raise wages due to a growing labor shortage in Latvia. However, more active domestic consumption, in turn, leads to rising inflation - this year it is expected to be 3.9% instead of the 3.4% predicted six months ago. Inflation is also forecasted to remain above 3% in the coming years. In addition to rising wages, another reason for this is the constantly increasing prices for food.
The budget deficit of Latvia exceeds 3% of the gross domestic product, which is mainly related to increased defense spending. According to the Bank of Latvia's forecast, economic growth in the country will be 1.7% this year, and in the following years, it will remain below 3%. However, no significant economic recovery is expected in either Latvia or Europe.
“The problem in Europe is the sluggish economic growth. In my opinion, the main obstacle here is the common market for goods and services in the European Union. Our mutual trade restrictions, barriers, and tax rates between EU countries are several times higher than those imposed by the United States this year,” said the president of the Bank of Latvia, Mārtiņš Kazāks, as quoted by the Estonian publication.
According to the Bank of Latvia, in the coming years, the economy will be influenced by investments in defense, most of which will be allocated to domestic enterprises and the construction of the Rail Baltic railway.
