RIGA, June 3 (LETA) - The European Bank for Reconstruction and Development (EBRD) has revised down its economic growth projections for the three Baltic countries for this year and next.

According to the latest EBRD forecasts, Latvia's gross domestic product (GDP) will grow by 2 percent this year, compared to 2.2 percent in the EBRD's February outlook, while GDP growth projection for next year has also been cut by 0.2 percentage points to 2.3 percent.

The bank has cut Estonia's economic growth forecast by 0.1 percentage point to 2.1 percent for this year and by 0.2 percentage points to 2.3 percent for next year.

At the same time, the EBRD expects Lithuania's GDP to grow 3 percent this year and 2.2 percent in 2027, down from 3.3 percent and 2.5 percent respectively.

The Baltic states' outlook remains supported by resilient private consumption, rising defense expenditure and continued public investment, including through European Union funds and major infrastructure schemes such as Rail Baltica. At the same time, the region faces a more difficult backdrop of higher energy prices, given the conflict in the Middle East, persistent cost pressures and still-subdued demand in key export markets in the euro area and the Nordic region.

According to the EBRD, risks for Latvia are tilted to the downside and stem from the possibility of a prolonged conflict in the Middle East, Rail Baltica delays, and difficulties at airBaltic. Similarly to Estonia, Latvia's participation in the Nordic-Baltic states regional electricity market mitigates the energy shock facing other European markets as a result of the Middle East conflict.

Growth in the EBRD regions is expected to slow from 3.4 percent in 2025 to 3.1 percent in 2026 before picking up to 3.6 percent in 2027.

Ukraine's growth projection has been cut 0.3 percentage points to 2.2 percent in 2026, rising to 4 percent in 2027.