Baltic Countries Hit Hard by the Recession
While the world’s attention is focused on the fortune of the largest economies, countries in the Baltic have been hit hard by the current downturn. The economy of Lithuania decreased by whopping 22.4%, marking the most pronounced decline since 1990. Governments of the three Baltic states have taken the toughest measures in the EU to halt economic decline.
In the first three months of this year alone, Lithuania’s economy declined by 13.3%. The Baltic states of Estonia, Latvia and Lithuania are affected by a deep recession due to severely declining of property values, tightening credit conditions and reduced exports.
The three states that between 2004 and 2006 had the highest rates of development from EU are currently facing the steepest drop among emerging economies, according to the latest World Bank report.
SEB AB, the largest bank in Lithuania and Swedbank, the largest bank in Estonia and Latvia, is facing huge losses from bad loans. Both banks reported net losses in the second quarter because of that and reduced the volume of new loans.
“Economic decline is very fast, but we expect macroeconomic indicators to improve in the second half of the year,” said agency Bloomberg Vilija Tauraite , economist at SEB Bank. The “hard landing” of the economies of the Baltic states has been anticipated by the rating agencies, the IMF and the World Bank since 2007.