Page 52 - CE Outlook Regions 2022

3.2 Real economy - Baltic states

3.2.1 Retail

Throughout 2021, private consumption in the three Baltic states
managed to come back and, in some segments, exceeded the
pre-pandemic level as the subsequent waves of the coronavirus were
met resiliently, with the population adapted to the new social behaviour
norms.

There are solid grounds for consumption to maintain growth and remain
a solid pillar of the economies in 2022. Households’ financial situation
should remain good, although purchasing power will suffer somewhat
because of high inflation, interest rate hikes, and the overall rise in the
costs of living.

Data on retail sales indicate a permanent change in Baltic consumers’
purchasing habits to the advantage of online retailing even during
periods of the weakened pandemic in the summer. This suggests that
the possible intensification of the pandemic and the tightening of
restrictions should not cause a strong decline in consumption.

However, a drastic rise of energy prices – up to 100% for household
heating in Lithuania, for example, since the beginning of 2022 – could
slow down, at least temporarily, consumption and purchasing.

If not properly addressed, the energy price rise can increase social
inequality and furthermore – possibly trigger social unrest.

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