🇪🇪🇱🇻🇱🇹 Baltic Central Banks: what do their presidents say about 2026?
The heads of the Baltic central banks have summed up the economic year and presented their outlooks for Estonia, Latvia and Lithuania. Growth is expected across the region, but the drivers — and the risks — differ significantly. What did the presidents of the central banks highlight in their latest forecasts?
🇪🇪 Estonia | Eesti Pank (Dec 2025)
Growth via fiscal stimulus — at the cost of rising debt
• GDP growth: 3.6% in 2026, slowing to ~2.5% by 2028
• Drivers: tax changes, higher public spending, lower interest rates
• Budget deficit: largest in 30 years (excluding pandemic)
• Public debt: 31.5% of GDP by 2028
• Annual interest costs: ~€400m, double current level
Key point: short-term boost financed by debt; delayed fiscal consolidation increases future risks.
🇱🇹 Lithuania | Lietuvos bankas (Dec 2025)
Cyclical growth driven by pension reform
• GDP growth:
◦ 2025: 2.5%
◦ 2026: 3.2%
◦ 2027: 2.3%
◦ 2028: 3.0%
• Main factor: second-pillar pension withdrawals
◦ €1.2bn consumption boost in 2026
◦ Sharp slowdown in 2027
◦ New boost in 2028 (~€0.5bn)
• Inflation steadily declines to ~2.5% by 2028
Key point: growth comes in waves — policy-driven, not structural.
🇱🇻 Latvia | Latvijas Banka (Dec 2025)
Gradual recovery with higher inflation and debt
• GDP growth:
◦ 2025: 1.7%
◦ 2026: 2.8%
◦ 2027: 2.9%
◦ 2028: 3.2%
• Inflation: 3–4% throughout the period
◦ 2025: 3.9%
◦ 2028 spike linked to ETS2, excise taxes, regulated tariffs
• Budget deficit: >3% of GDP
• Public debt: ~51% of GDP by 2028, driven by defence spending
Key point: more stable growth path, but persistent inflation pressure and rising debt.
🧭 Baltic comparison — core takeaway
• 🇪🇪 Estonia: fastest rebound, fiscally risky
• 🇱🇹 Lithuania: internally engineered cycles
• 🇱🇻 Latvia: smoother recovery, higher inflation and debt burden
All three economies recover — but through very different policy choices.
Image: photos/photo_133@22-12-2025_21-18-48.jpg