Head of Nordic Investment Bank: Latvia and several regional economies have stagnated for years

The head of the Nordic Investment Bank (NIB) said in an interview that the economies of Latvia and several other countries in the region have been stagnating for years. He emphasized that small GDP increases of 0.5%, 1%, or 1.5% are not meaningful if they are not consistent. Consistent growth is lacking in this part of the world, and Lithuania is faring relatively better than the other Baltic states.

Although recent quarterly indicators in some regional countries are more positive, the NIB president warned that a large part may be due to short-term factors, such as redirected consumption, which does not support long-term growth. He also noted that nearly all banks and institutions that produce economic forecasts have revised them downward due to the Middle East crisis.

According to Kiesewetter, crises have become more frequent – now occurring every few years instead of rarely. This puts pressure on people's future expectations and reduces the willingness to invest, as companies often postpone investments until the situation becomes more stable.

Europe as a whole has been too slow to respond to “wake-up calls” – both the war in Ukraine and changes in US policy. However, positive “green shoots” are visible in the Nordic-Baltic region: increased unity at the highest political level, in defense, and in the private sector, which is taking more initiative in regional connectivity.

The NIB head stressed that much can be learned from Ukraine, which, despite the war, has been able to introduce more innovation than Europe in peacetime. The NIB is an international financial institution owned by eight Nordic and Baltic countries.