The International Money Fund cut its 2016 and 2017 growth forecasts for the Baltic countries on Wednesday, and warned that shrinking corporate profit margins were a risk to their longer-term economic growth.
The Fund said in a report that the economies of Estonia, Latvia and Lithuania would together grow by 2.3 percent this year and by 3.0 percent in 2017. In April, it had forecast a 2.7 percent expansion in 2016, rising to 3.2 percent next year.
"Stimulatory macroeconomic policies and buoyant consumer confidence are likely to propel near-term growth," the IMF said. It did not explain why its projections had been revised downwards. Latvia was seen as the next year's strongest performer, with GDP forecast to expand by 3.4 percent compared with 3.0 percent in Lithuania and 2.5 percent in Estonia.
Those growth rates may be hard to sustain, however, the IMF said, citing corporate profit margins near lows last seen during the 2009 economic crisis, when many firms resorted to wage cuts and layoffs.
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