The economic recovery over the past year has been impressive. In many countries, economic output was already back at pre-crisis levels this summer. Stronger-than-expected development during the second quarter has caused us to revise up the growth outlook for the euro area, as well as the Nordic and Baltic economies, for this year.
After a relatively mild and short-lived recession last year, the Baltic economies have rebounded quicker and more forcefully than we expected. The recovery is largely broad-based – economic sentiment has returned to pre-pandemic levels, consumption is growing rapidly, and exports are booming, while business and public investments are rebounding and are likely to be boosted further by EU funds and a favourable credit environment.
Nevertheless, some risks related to the pandemic remain, the biggest medium-term challenge is to invest wisely, avoid overheating, and further transform the Baltic economies.