RIGA, July 7 (Xinhua) -- The Latvian economy, which just like the vast majority of other nations all over the world is being affected by the ongoing coronavirus pandemic, will contract by 7 percent this year and rebound by 6.4 percent next year, according to the European Commission's latest forecast released on Tuesday.
Commenting the Summer 2020 Economic Forecast released by the EU executive arm, the European Commission's Executive Vice President Valdis Dombrovskis noted that the forecast of "Latvia's GDP dynamic for this and next year is better than the forecast for the EU and the eurozone."
The European Commission expects the EU economy to shrink 8.3 percent in 2020 before it grows 5.8 percent next year. The eurozone economy, meanwhile, will likely drop 8.7 percent and grow by 6.1 percent next year.
The EU Commission noted that the 2.9 percent quarterly contraction of the Latvian economy during the first three months of 2020 was somewhat less severe than expected.
"Consumption took by far the largest hit as confinement measures enacted in the middle of March shut many services down and uncertainty over future incomes made consumers hold back on purchases of durable goods. Exports of services declined substantially due to border closures and falling demand. Government consumption picked up because of increased spending on healthcare," the Commission said.
According to the latest forecast, Latvia's GDP is expected to decline by some 13 percent in the first half of 2020 compared to the last half of 2019. "It is expected to recover rather quickly receiving a particular boost at the end of the year when work begins on the Rail Baltica project, which will integrate the rail systems of the Baltic countries with the rest of the EU," the Commission said.
Dombrovskis stressed the importance of reaching an agreement on Europe's recovery plan, which is necessary to stimulate the bloc's economy in 2021. Enditem
