RIGA, Jan. 2 (Xinhua) -- Latvia's gross domestic product (GDP) is likely to grow by 4.2 percent this year, according to the Latvian Economics Ministry's forecast.
After several years of sluggish growth, the Latvian economy showed much stronger performance in 2017, expanding by at least 4.5 percent from a year before, the ministry said on Tuesday, noting that during the first three quarters of last year Latvia's GDP grew by 4.7 percent against the same period in 2016.
In the previous four years, by comparison, Latvia's GDP had been growing at an annual rate between 2 and 3 percent on average, the ministry said.
In 2017, Latvia's economic growth accelerated thanks to an improved external environment, a faster inflow of EU investment and wage growth.
Exports, as well as private and public consumption, have been growing steadily in recent years, the ministry said, noting that export volumes hit an all-time high last year on increased external demand.
After two years of decline, investment jumped 18.5 percent in the first three quarters of 2017, pushing construction up 18.6 percent as well.
Latvian entrepreneurs' ability to boost their competitiveness and growing demand in key export markets like the EU and the CIS fueled manufacturing, which in the first three quarters of 2017 quickened 8.5 percent year-on-year, the ministry said.
Taking into consideration the favorable situation, Latvia's economic growth is expected to remain strong in 2018, the ministry said, projecting this year's growth at 4.2 percent.
Manufacturing and construction are the two sectors expected to show the fastest growth in 2018, the ministry said, adding that the main economic challenges at this point are related to the increasingly tight situation in the Latvian labor market, with the labor shortages creating pressure on wages and affecting producers' competitiveness in foreign markets.
