69
Lithuania
The slowdown in economic growth in the second half of 2006 cannot really be seen as a negative development given the danger of overheating. The economy will continue to grow by between 6% and 7% in the next few years, while the current account deficit will remain in the region of 10%. The fall in inflation in the forthcoming years will be decisive for convergence with the euro. We do not expect the euro to be adopted before 2010.
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|
Population |
3.4 million |
|
Area |
65,300 sq. km |
|
Capital |
Vilnius |
|
Currency |
Lithuanian litas |
|
GDP (nominal) |
€ 23.6 bn |
|
Per capita GDP |
€ 7,020 |
|
GDP growth in 2006 (real) |
7.5 % |
Latvia
Latvia’s process of rapid convergence with the EU in real and monetary terms is continuing, although mostly at the expense of macroeconomic stability. The country would need to pursue a more restrictive budget policy in light of the central bank’s limited room for manoeuvre. It could then address the growing imbalances in foreign trade and the domestic economy, paving the way for a soft landing for the economy.
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|
Population |
2.3 million |
|
Area |
64,590 sq. km |
|
Capital |
Riga |
|
Currency |
Latvian lat |
|
GDP (nominal) |
€ 16.0 bn |
|
Per capita GDP |
€ 7,028 |
|
GDP growth in 2006 (real) |
11.9 % |
Estonia
Low interest rates and strong foreign demand kept GDP growth in the double digit range in 2006. While economic growth was previously supported by productivity increases, there are now clear signs of an overheating of the economy. The growth rate is likely to lose some of its momentum in the next few years as inflation, rising interest rates and the higher indebtedness of the private sector will dampen domestic demand.
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|
Population |
1.3 million |
|
Area |
45,230 sq. km |
|
Capital |
Tallinn |
|
Currency |
Estonian crown |
|
GDP (nominal) |
€ 13.0 bn |
|
Per capita GDP |
€ 9,690 |
|
GDP growth in 2006 (real) |
11.3 % |