OREANDA-NEWS. January 28, 2014. The nation's largest commercial bank, Swedbank, has predicted that economic growth will reach 3 percent this year, further increasing to 3.7 percent next year, far outpacing last year's 1 percent growth.

The bank's chief economist, Tonu Mertsina, said in a press release on Tuesday that the bank expects inflation to drop from last year's 2.8 percent to 2.6 percent in 2014, but to increase to 2.9 percent in 2015.

The new figures represent a downgrade - in October the bank predicted 3.8 percent and 4.2 percent growth for 2014 and 2015, respectively,

External demand and investments will play a big role in economic growth, he said.

Mertsina said that electricity price increases - the major inflationary force in 2013, will be replaced by increasing salaries and consumer optimism as the main driver of inflation.

Food and oil prices should decrease, he said.