The three booming Baltic states are showing tentative signs of a slowdown in some of the hottest areas of growth, but could still suffer hard landings, analysts said on Thursday. Latvia has shown the greatest signs of overheating, though economic strains in all three have meant plans to join the eurozone have been delayed to 2010 at the earliest.
The Latvian government in March launched a special anti-inflation plan after worries over macro-economic imbalances sparked a wave of speculation against the lat currency. The speculation has died down, the lat has firmed back up to the top end of its band against the euro and the central bank has been selling small amounts of euros in recent weeks.
"In Latvia you can see more of those indicators that are very hot, then comes Estonia, which is very close us," said Latvian SEB Unibanka economic analyst Andris Vilks. "Lithuania is more peaceful." He noted that the Latvian property market, where prices have soared by two or three times in recent years amid a flood of easy money from Swedish-owned banks, was slowing slightly.
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