Page 40 - CE Outlook Regions 2024

3.2.5 Construction
The Baltic real estate market, especially its residential sector, stagnated in 2023 and was expected to remain this way throughout 2024 due to the high (ca 4.8%) interest rates.
Potential homebuyers will remain cautious in 2024 and won’t rush their decision-making when it comes to buying a dwelling, whereas home sellers will be trying in 2024 to find a balance between their own expectations, and the real estate market price.
The low level of debt, the popularity of loans with variable interest rates and the relatively good housing price-to-income ratio led to the fact that the issuance of new loans in the Baltic countries continued despite high interest rates. A quick reaction to changes in monetary policy also means that the interest rate cuts expected from 2024 onwards will support economic recovery.
The mood of the construction sector in Lithuania and Latvia remains stable and does not indicate a decline in this sector. In part, the resilience of construction may be due to high demand from the public sector, which is ensured by the opportunities to take advantage of EU-funded investments.
3.2.6 Major Sectors
The Baltics rely on tourism as one of the key sectors. Tourism in the Baltic states has been hit hard by the depth and duration of the crisis triggered by the COVID-19 pandemic and then Russia’s aggression against Ukraine.
The war has drastically affected the cruise passenger sector in the Baltic ports of Klaipeda, Tallinn and Riga; however the sector was seeing a rebound in 2023.
The security problem in 2024 will remain highly relevant across the Baltic Sea region, where travelling is to a large extent based on the maritime sector.
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