Economic growth expected to be slower

Aug 24, 2023

The latest Global Economic Outlook by the EY (formerly Ernst & Young) expert research group "EY Parthenon" shows that the GDP of the world economy will grow by 2.6% this year and 2.8% next year, while the growth of the Eurozone will be slower - only 0.7% this year and 1.2% next year.

"Next year, all Eurozone countries will return to growth. However, we see that central banks in developed countries maintaining rate hikes and trying to bring inflation down, even if it reduces economic activity. It should be noted that monetary policy decisions reach and affect the economy with a certain time lag, which can have a noticeable impact on the spending of companies and households in the second half of this year and next year. According to the latest European Central Bank’s Euro Area Bank Lending survey, corporate demand for loans has decreased strongly. More expensive financing will mean that companies postpone or cancel investments, while households tighten their belts and do not spend money because of higher loan payments. It's all the price of inflation," says Guntars Krols, EY Partner in the Baltic States.

"Delfi Bizness" has already informed that Latvia's national economy is in stagnation, and the growth of the next years does not promise to be fast either, this is also emphasized by "Swedbank" in the review published on August 23, 2023.

The EY study predicts that inflation in the Eurozone as a whole will fall rapidly and will be only 1.7% next year, against 5.4% this year and 8.4% last year.

EY's review shows that most eurozone countries will avoid recession this year and maintain positive growth. The exception will be countries that are strongly based on production, that is, in Germany, the economy will decrease by 0.4% this year, in Hungary also by 0.4% and in the Czech Republic by 0.2%.

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