All of the Nordic and Baltic countries are enjoying a "remarkably smooth and steady" business cycle presently despite a challenging global economic environment, according to a new Swedbank report.

"The economies remain competitive, but a rise in global protectionism threatens the short-run outlook while structural challenges (e.g., demographics) will hinder growth going forward, especially in the Baltic countries," Swedbank says in its new Nordic-Baltic Business Report.

However "When it comes to social inclusion and governance, the Baltic countries can learn a lot from their northern neighbors. All countries could and should do more in environmental protection," the report advises.

Latvia's economy is described as "strong and balanced" after nine consecutive years of expansion, but improvements to administration and, above all, demographic and educational challenges need to be tackled to ensure that competitiveness can be maintained and improved, the report says.

"Human capital is an important limiting factor... since the pre-crisis period, Latvia has seen the fourth-biggest improvement in the world in terms of the happiness of its society. But at the same time it has lost 15% of its population (two thirds to migration) and the projections are grim. A shrinking and ageing society makes future growth very challenging," Swedbank says. Improving healthcare and educational opportunities are therefore "paramount," it adds.

The full report is available to read online.

