While the outlook for the Nordic economies is still fine ...
For the depressed Latvia the outlook should be as follows:
The economic recovery continued in Q2, with GDP growing quarter-on-quarter for the second consecutive quarter. The pick-up in GDP has so far been fairly modest, but the cycle seems to have bottomed. Exports have so far been the main driver of the recovery, as expected, with Latvia benefiting from the recovery in the other EU countries as well as Russia. The domestic economy is seen improving in the second half of the year, although consumption is likely to remain weak due to the still elevated unemployment, the tight credit markets and the weak income development.Click on charts to enlarge, courtesy of Nordea Markets.
Nevertheless, the improving consumer confidence indicates that domestic demand is on the recovery track as well. We see the economy returning to year-on-year growth in 2011 on improving exports and strengthening consumption, with growth gaining further momentum in 2012. However, it will take years for the economy to reach the levels seen a couple years back.
Just pray that global slowdown is not hitting the export dependant Latvia again.