For Baltic States and Eurozone in general the year 2024 will be yet another endurance year. Nevertheless, more rapid economic growth and reducing inflation will be observed, says the President of Eurogroup, which unites ministers of finance of Eurozone, Minister for Public Expenditure, National Development Plan and Reform in Ireland Paschal Donohoe.
Eurogroup president, who met with the governors of Baltic central banks and ministers of finance last week, stressed that economies of Baltic States had so far demonstrated strong resilience, because when the Russian war in Ukraine had first started, they were the first to experience a sharp inflation surge.
“The last time I visited here, we discussed rapidly rising inflation, which could have a very serious impact on living standards and economic performance. Now we’re at the beginning of 2024. We have experienced a dramatic inflation surge in Latvia and neighbouring countries, but we can see that all of these economies have avoided a significant recession,” said Donohoe.
“As an Irishman who also represents a relatively small economy on the edge of Europe, I think we have had very similar experiences. What the euro offers Latvia and what it offers Ireland is a promise of stability in the event of global challenges. I believe that it is thanks to the fact that we are Eurozone members, we have been able to overcome the pandemic. It was easier for us to overcome high inflation periods that came as a result of the consequence of war and the pandemic. This is about stability,” said the Eurogroup president.
He also stressed that euro was the only global reserve currency that had a war on its doorstep. It has had an enormous effect both on inflation and the overall trust in euro. But Eurozone has managed to avoid a recession, which many had previously predicted as unavoidable, and has preserved a very high employment level in many countries, Latvia included.
“We can see that if we look at the accomplishments of Latvia’s economy. You’ve been on the front line, solving the economic consequences of high inflation, and although there was an economic decline observed, it was moderately calm. At the same time you managed to maintain employment at a very high level. This is a very good story to tell about the resilience in Euroozone and here, in your economy. You know, if five years ago someone said the economy was going to face 20% inflation several months from now, a severe recession would seem inevitable. Your economy endured such a huge inflationary shock and managed to avoid a major recession anyway. I think this is a significant achievement,” said the Eurogroup president.
As for future outlooks, Donohoe said this would be yet another endurance year. He did say he predicted a more rapid growth than last year, lower inflation and a very large number of employed people. (BNN/Business World Magazine)