The development of the transport sector will continue to be hindered by the geopolitical situation, predicts the Bank of Latvia

The demand for cargo transportation in Europe has gradually started to increase, but still remains low. Sentiment indicators show that demand will recover later than expected, so faster growth of the industry is expected only in the second half of the year, predicts the Bank of Latvia.

The recovery of demand will mainly contribute to the performance of Latvian road carriers in international and export transportation, where cargo turnover decreased significantly last year, the report says.

The volume of cargo in Latvia’s largest ports and in railway transport will stabilize at an all-time low this year, but the fluctuations will become smaller than before, predicts the Bank of Latvia. At the beginning of the year, a ban on the import of agricultural and fodder products from Russia and Belarus into Latvia was adopted, but the proportion of these cargoes is relatively small and the impact on the total cargo volume will not be significant.

At the same time, the future direction will be determined by the geopolitical situation, moreover, the expansion of sanctions will increasingly affect the existing cargo flows, but it will not be possible to increase the volumes of transit cargo in the coming years, according to the Bank of Latvia.

According to the forecasts of the central bank, air transport will remain the most stable situation in the sector this year as well. Although the increase in the number of passengers will become more and more moderate, the increase will be faster than in the other Baltic countries, but the total number of passengers will already this year approach the level that was before the pandemic.

The Bank of Latvia expects that the increase in economic activity will contribute to transit passenger flows at Riga Airport, however, due to the geopolitical situation, they will remain lower than before the pandemic.