Russia's invasion of Ukraine, high inflation, rising interest rates and falling real incomes are significant risks for the Baltic region. In recent months, growth forecasts for the Baltic economies for 2022 have been reduced, and this year's growth in all three Baltic countries could be around 2%. The good news is that currently the economic situation is still good. Household spending is rising, COVID-19 restrictions have been lifted, households have savings, and rising energy prices are being offset by government support measures. At the same time, unemployment is falling in the labor market, wages are rising and the negative effects of the war on Ukraine are not yet felt. However, the risks of recession in the Baltics in the next year or two are high. Consumer sentiment is pessimistic, prices are rising faster than wages and purchasing power is declining, while the effects of Russia's war are only partially felt. Consumer price inflation in the Baltics is likely to exceed 12% this year, and could be in the range of 4-5% next year. At current energy prices, Baltic energy import costs will increase by substantially. Without public support, households will not be able to cover such costs in the autumn and GDP growth is likely to be very low next year. According to my forecasts, the GDP of the Baltic States will not grow faster by 1-2% next year. The good news is that the Baltic economies are in good shape. Government, household and corporate debt is low, lending is financed by local resources and external trade is balanced. Therefore, the recession is likely to mean lower external demand, a slower recovery in the services sector, lower real incomes and lower purchasing power, and possibly a small rise in unemployment. However, in euro term, the economy will continue to grow, and in this situation it is important not only to think about risks, but also to look for opportunities, and on the part of the government - not to think only about subsidies, but invest in energy sector.