RIGA, Feb. 26 (Xinhua) -- The European Bank for Reconstruction and Development (EBRD) has revised upwards its economic growth forecasts for all three Baltic countries this year, citing rising wages, increased defense expenditure and the implementation of major infrastructure projects.
According to the EBRD forecast released on Thursday, Latvia's gross domestic product (GDP) is projected to grow by 2.2 percent this year, up from the 1.9 percent projected in September 2025. The bank also raised Estonia's growth forecast by 0.2 percentage points to 2.2 percent, and increased Lithuania's GDP growth forecast by 0.1 percentage points to 3.3 percent.
For 2027, the EBRD expects all three Baltic economies to expand by 2.5 percent.
In Latvia, growth this year and next is expected to be supported by further real wage growth. Public investment is projected to remain high, driven by defense spending approaching 5 percent of GDP and ongoing work on the Rail Baltica project.
Lithuania outperformed its Baltic neighbors in 2025, with a 2.8 percent growth fueled by strong domestic demand, the EBRD said. The country's growth is supported by solid wage gains and a tight labor market. Public investment expanded, backed by defense procurement and European Union-funded projects. While output of transport equipment and chemicals declined, electronics production expanded strongly.
Estonia also exceeded the EBRD's expectations in 2025, with real GDP growth accelerating to an estimated 3.6 percent, the fastest pace since 2022. ■