Economics - About Latvia - EN - Latvijas Krājbanka

Since the year 2000 Latvia has had one of the highest (GDP) growth rates in Europe. In 2006, annual GDP growth was 11.9% and inflation was 6.2%. Unemployment was 8.5% — almost unchanged compared to the previous two years. However, it has recently dropped to 6.1%, partly due to active economic migration, mostly to the Republic of Ireland and United Kingdom.
Privatisation has been mostly completed, except for some of the large state-owned utilities. Latvia is a member of the World Trade Organization (1999) and the European Union (2004). The fast growing economy is mostly driven by growth of domestic consumption, financed by a serious increase of private debt, as well as negative foreign trade balance. The prices of real estate, has risen steadily over the last years, but their future growth is restrained through introducing a legislature act on proved and taxed income if mortgage from banks is seeked for. It has been noted that the prices of some segments of real estate market have been stabilised as of summer 2006 and some experts expect serious reduction of real estate prices in the near future. The government has recently introduced a special plan to reduce inflation and sustain a high growth rates. The main points of the plan are:

Creation of a non-deficit state budget for the current 2007 year and a budget with a surplus for 2008 and beyond;
Taxation of transactions with real estate that has been in a person's possession for less than three years;
Increase on control of loan issuing;
Increase in energy effectiveness at homes and business as a mean to secure against possible rises of energy costs in future
Increase in work productivity and stimulating competitive business environment

Latvia has plans to introduce Euro as the country's currency but, due to the inflation being above EMU's guidelines, this is likely to be postponed temporarily

Industry:

Throughout its history Latvia has enjoyed the economic advantages of its strategic Baltic Sea position right on the major trading routes between North and South, East and West. Latvia's three major ports are Ventspils, Rīga and Liepāja. Ventspils is one of the busiest ports in the Baltic Sea region. It is ice-free the whole year and provides effective cargo operations on its powerful terminals. Latvia has many transportation possibilities available: ports, airports, roads, railway, as well as pipelines. Some of the ports, as well as other parts of Latvia, are considered as Special Economic Zones - Ventspils Free Port, Rīga Free Port, Liepāja Special Economic Zone, Rēzekne Special Economic Zone. Incentives in special economic zones include a lower tax environment and a free customs regime. Latvia’s main Trade-Partners are other member states of the European Union.

The Most Prospective Production Sectors are information technologies, electronics and mechanical engineering, chemical and pharmaceutical industries, timber and construction, food processing industry, textiles industry, fishery and agriculture.

According to the Latvian Institute www.li.lv, www.latvija.lv, wikipedia.org, et.al.

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Riga, Latvia, LV-1013

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