This winter, the Baltic region has managed to avoid the worst case energy crisis scenarios and energy prices have decreased significantly. However, the situation in the economy is still very uncertain and there are no significant improvements in short-term economic indicators. On the contrary, in April and May, the economic sentiment in the Baltics has worsened again, demand in manufacturing remains weak and the decline in production volumes will continue most likely until the end of the year. In addition, high inflation has reduced purchasing power of households and, despite the rapid rise in wages, retail sales volumes are slightly shrinking. Also, the turnover of payment cards does not indicate any increase in spending since the end of the heating season. In the coming months, however, the situation for consumers will begin to improve. Energy prices are decreasing and a slight monthly deflation is possible in the Baltics in the coming months, while the average annual inflation in the Baltics in 2023 could be around 9-9.5%. In the second half of the year, the purchasing power of the households will begin to grow again, however, GDP in 2023 as a whole is likely to decrease slightly. However, in 2024, the Baltic region is likely to return to positive growth again. This will be facilitated both by the recovery of industry after the end of the destocking cycle, and also by the large investments of EU funds, which will flow into the economies of the Baltic countries in the next year.