Latvian economy to grow 2.4% in 2015

The Latvian economy is likely to grow by 2.4 percent this year, which would be as fast as last year, according to the latest Nordic Outlook released by SEB Bank.

In 2016, Latvia's economic growth is expected to pick up to 2.7 percent.

SEB has cut Latvia's GDP growth forecast by 0.2 percentage point for 2015 and by 0.3 percentage point for 2016 from its previous prognosis, which was released in February.

"The imminent presidential election may cause political instability in Latvia, but the economy is robust," the Scandinavian bank said in its report.

SEB projects private consumption to keep increasing at a healthy pace in all three Baltic states - Latvia, Lithuania and Estonia - helped by real wage increases averaging 4.5 to 5.5 percent a year, with Latvia showing the steepest wage growth.

Inflation in all three Baltic states is expected to remain comparatively low this year, but in 2016 Latvian and Estonian consumer prices are likely to rise by more than 2 percent, the target set by the European Central Bank (ECB).

SEB expects Latvia's inflation rate to reach 0.8 percent this year and to accelerate to 2.1 percent in 2016.