Macroeconomic Forecast Latvia

Latvia's unemployment rate continued to spiral in November, reaching 15.1%, compared to 14.1% the previous month. Moreover, the rate of joblessness has been increasing by around 1pp each month since August, and is set to trend higher in 2010. To be sure, with Latvia's great recession now looking more like a depression and with unemployment unlikely to head lower until a fundamental demand recovery gets underway, we forecast the jobless rate heading to 18.5% by end-2010, and to then start falling in 2011 to 15.0% by end-year. Given the anaemic recovery which we project for the Latvian economy, we similarly expect unemployment to remain in the double digits through to 2014.

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