During 1990-2016. Latvia's GDP in current prices increased by 17.9 billion dollars (2.9 times) to 27.6 billion dollars; the change occurred by -$2.5 billion due to a drop in population by 0.69 million, as well as by $20.4 billion due to an increase in GDP per capita of $10,362.0. The average annual growth of Latvia's GDP amounted to 0.69 billion dollars or 4.1%. The average annual growth of Latvia's GDP in constant prices is 0.44%. The world share decreased by 0.0056%. The share in Europe increased by 0.034%. The minimum GDP was in 1993 ($5.2 billion). The maximum GDP was in 2008 ($35.6 billion).
During 1990-2016 GDP per capita in Latvia increased by $10,362.0 (3.9 times) to $13,993.0. The average annual increase in GDP per capita at current prices was $398.5 or 5.3%.
The change in Latvia's GDP is described by a linear correlation-regression model: y=1.2x-2 319.6, where y is the estimated value of Latvia's GDP, x is the year. Correlation coefficient = 0.884. Determination coefficient = 0.782.
Latvian GDP, 1990-2008 (growth)
For the period 1990-2008. Latvia's GDP at current prices increased by $25.9 billion (3.7 times) to $35.6 billion; the change occurred by -$1.8 billion due to a drop in population by 0.49 million, as well as by $27.7 billion due to an increase in GDP per capita of $12,758.0. The average annual growth of Latvia's GDP was at the level of 1.4 billion dollars or 7.5%. The average annual growth of Latvia's GDP in constant prices was 0.64%. The world share increased by 0.014%. The share in Europe increased by 0.050%.
During 1990-2008 GDP per capita in Latvia increased by $12,758.0 (4.5 times) to $16,389.0. The average annual increase in GDP per capita at current prices was $708.8 or 8.7%.
Latvian GDP, 2008-2016 (decline)
During 2008-2016. Latvia's GDP at current prices decreased by $8.0 billion (22.5%) to $27.6 billion; the change was -$3.3 billion due to a drop in population of 0.20 million, and also -$4.7 billion due to a drop in GDP per capita of $2,396.0. The average annual growth of Latvia's GDP was at the level of -1.0 billion dollars or -3.1%. The average annual growth of Latvia's GDP in constant prices was -0.017%. The world share decreased by 0.019%. The share in Europe decreased by 0.016%.
For the period 2008-2016. GDP per capita in Latvia increased by $2,396.0 (14.6%) to $13,993.0. The average annual growth in GDP per capita at current prices was -$299.5 or -2.0%.
Latvian GDP, 1990
Latvian GDP in 1990 was equal to 9.7 billion dollars, ranked 88th in the world and was at the level Lithuania GDP($10.3 billion), Ghana GDP($10.0 billion), Dominican Republic GDP($9.5 billion), Sri Lanka GDP($9.4 billion), Uruguay GDP($9.2 billion). The share of Latvia's GDP in the world was 0.042%.
In 1990 it was 3,631.0 dollars, ranked 72nd in the world and was at the level of GDP per capita in Russia (3,869.0 dollars), GDP per capita in Turkey (3,847.0 dollars), GDP per capita in Yugoslavia (3,764.0 dollars), GDP per capita in Czechoslovakia ($3,653.0), GDP per capita in the Cook Islands ($3,623.9), GDP per capita in Estonia ($3,589.0), GDP per capita in Hungary ($3,573.0 ), GDP per capita in Montenegro ($3,491.0), GDP per capita in Croatia ($3,479.0), GDP per capita in Mexico ($3,437.0). GDP per capita in Latvia was less than GDP per capita in the world ($4,313.0) by $682.0.
Comparison of the GDP of Latvia and its neighbors in 1990. Latvia's GDP was greater than Estonia GDP($5.6 billion) by 72.2%, but was less than Russia's GDP($571.0 billion) by 98.3%, Belarus GDP($19.6 billion) by 50.5%, Lithuania GDP($10.3 billion) by 5.7%. GDP per capita in Latvia was greater than GDP per capita in Estonia ($3,589.0) by 1.2%, GDP per capita in Lithuania ($2,775.0) by 30.8%, GDP per capita in Belarus ($1,915.0 ) by 89.6%, but was less than GDP per capita in Russia ($3,869.0) by 6.2%.
Comparison of Latvian GDP and leaders in 1990. Latvia's GDP was less than US GDP($5,979.6 billion) by 99.8%, Japan GDP($3,140.0 billion) by 99.7%, Germany GDP($1,764.9 billion) by 99.5%, France GDP($1,275.3 billion) by 99.2%, Italy GDP($1,177.4 billion) by 99.2%. GDP per capita in Latvia was less than GDP per capita in Japan ($25,218.0) by 85.6%, GDP per capita in the USA ($23,679.0) by 84.7%, GDP per capita in Germany ($22,308.0) ) by 83.7%, GDP per capita in France ($21,789.0) by 83.3%, GDP per capita in Italy ($20,610.0) by 82.4%.
Latvian GDP potential in 1990. With a GDP per capita at the same level as Japan's GDP per capita ($25,218.0), Latvia's GDP would be $67.2 billion, which is 6.9 times the actual level. With GDP per capita at the same level as GDP per capita in Northern Europe($19,942.0), Latvia's GDP would be $53.1 billion, which is 5.5 times more than the actual level. With a GDP per capita at the same level as the GDP per capita in Europe ($12,073.0), Latvia's GDP would be $32.2 billion, which is 3.3 times the actual level. With GDP per capita at the same level as world GDP per capita ($4,313.0), Latvia's GDP would be $11.5 billion, which is 18.8% more than the actual level. With a GDP per capita at the same level as Russia's best neighbor ($3,869.0), Latvia's GDP would be $10.3 billion, 6.6% more than its actual level.
Latvian GDP, 2008
Latvian GDP in 2008 was equal to 35.6 billion dollars, ranked 83rd in the world and was at the level Kenya GDP($35.9 billion). The share of Latvia's GDP in the world was 0.056%.
GDP per capita in Latvia in 2008 was 16,389.0 dollars, ranked 63rd in the world and was at the level of GDP per capita in Barbados (16,738.0 dollars), GDP per capita in Croatia (16,187.0 dollars), GDP per capita in Hungary (15,814.0 dollars), GDP per capita in Libya ($15,748.0). GDP per capita in Latvia was greater than GDP per capita in the world ($9,376.0) by $7,013.0.
Comparison of the GDP of Latvia and its neighbors in 2008. Latvia's GDP was greater than Estonia GDP($24.2 billion) by 47.3%, but was less than Russia's GDP($1,660.8 billion) by 97.9%, Belarus GDP($63.0 billion) by 43.5%, Lithuania GDP($47.9 billion) by 25.7%. GDP per capita in Latvia was greater than GDP per capita in Lithuania ($14,899.0) by 10%, GDP per capita in Russia ($11,608.0) by 41.2%, GDP per capita in Belarus ($6,623.0 ) by 2.5 times, but was less than the GDP per capita in Estonia ($18,038.0) by 9.1%.
Comparison of Latvian GDP and leaders in 2008. Latvia's GDP was less than US GDP($14,718.6 billion) by 99.8%, Japan GDP($5,037.9 billion) by 99.3%, China GDP($4,604.3 billion) by 99.2%, Germany GDP($3,752.5 billion) by 99.1%, France GDP($2,923.6 billion) by 98.8%. GDP per capita in Latvia was greater than GDP per capita in China ($3,425.0) by 4.8 times, but was less than GDP per capita in the USA ($48,516.0) by 66.2%, GDP per capita in Germany ($46,252.0) by 64.6%, GDP per capita in France ($45,391.0) by 63.9%, GDP per capita in Japan ($39,190.0) by 58.2%.
Latvian GDP potential in 2008. With a GDP per capita at the same level as the GDP per capita in Northern Europe ($49,830.0), Latvia's GDP would be $108.2 billion, which is 3.0 times the actual level. With a GDP per capita at the same level as the US GDP per capita ($48,516.0), Latvia's GDP would be $105.4 billion, which is 3.0 times the actual level. With a GDP per capita at the same level as GDP per capita in Europe ($30,124.0), Latvia's GDP would be $65.4 billion, which is 83.8% more than the actual level. With a GDP per capita at the same level as the GDP per capita of Estonia ($18,038.0), its best neighbor, Latvia's GDP would be $39.2 billion, which is 10.1% more than the actual level.
Latvian GDP, 2016
Latvian GDP in 2016 was equal to 27.6 billion dollars, ranked 99th in the world and was at the level Paraguay GDP($27.2 billion), El Salvador GDP($26.8 billion). The share of Latvia's GDP in the world was 0.036%.
GDP per capita in Latvia in 2016 amounted to $13,993.0, ranked 68th in the world and was at the level of GDP per capita in Lithuania ($14,707.0), GDP per capita in Antigua and Barbuda ($14,462.0), GDP per capita in Palau ( $14,428.1), GDP per capita in Oman ($14,277.0), GDP per capita in Chile ($13,794.0), GDP per capita in Panama ($13,680.0). GDP per capita in Latvia was greater than GDP per capita in the world ($10,134.0) by $3,859.0.
Comparison of the GDP of Latvia and its neighbors in 2016. Latvia's GDP was greater than Estonia GDP($23.3 billion) by 18.1%, but was less than Russia's GDP($1,246.0 billion) by 97.8%, Belarus GDP($47.4 billion) by 41.8%, Lithuania GDP($42.8 billion) by 35.5%. GDP per capita in Latvia was 61.7% greater than GDP per capita in Russia ($8,655.0), GDP per capita in Belarus ($5,001.0) by 2.8 times, but was less than GDP per capita in Estonia ($17,782.0) by 21.3%, GDP per capita in Lithuania ($14,707.0) by 4.9%.
Comparison of Latvian GDP and leaders in 2016. Latvia's GDP was less than US GDP($18,624.5 billion) by 99.9%, China GDP($11,218.3 billion) by 99.8%, Japan GDP($4,936.2 billion) by 99.4%, Germany GDP($3,477.8 billion) by 99.2%, UK GDP($2,647.9 billion) by 99%. GDP per capita in Latvia was greater than GDP per capita in China ($7,993.0) by 75.1%, but was less than GDP per capita in the USA ($57,808.0) by 75.8%, GDP per capita in Germany ($42,456.0) by 67%, GDP per capita in the UK ($40,249.0) by 65.2%, GDP per capita in Japan ($38,640.0) by 63.8%.
Latvian GDP potential in 2016. With a GDP per capita at the same level as the GDP per capita in the United States ($57,808.0), Latvia's GDP would be $113.9 billion, which is 4.1 times the actual level. With a GDP per capita at the same level as the GDP per capita in Northern Europe ($43,520.0), Latvia's GDP would be $85.8 billion, which is 3.1 times the actual level. With a GDP per capita at the same level as the GDP per capita in Europe ($25,596.0), Latvia's GDP would be $50.4 billion, which is 82.9% more than the actual level. With a GDP per capita at the same level as the GDP per capita of Estonia ($17,782.0), its best neighbor, Latvia's GDP would be $35.0 billion, which is 27.1% more than the actual level.
| year | GDP, billion dollars | GDP per capita, dollars | GDP, billion dollars | GDP growth, % | share of Latvia, % | ||
|---|---|---|---|---|---|---|---|
| current prices | constant prices 1990 | in the world | in Europe | in Northern Europe | |||
| 1990 | 9.7 | 3 631.0 | 9.7 | 0.042 | 0.11 | 0.53 | |
| 1991 | 9.0 | 3 380.0 | 8.7 | -10.4 | 0.037 | 0.100 | 0.48 |
| 1992 | 6.0 | 2 277.0 | 5.6 | -34.9 | 0.023 | 0.062 | 0.31 |
| 1993 | 5.2 | 2 014.0 | 4.8 | -14.9 | 0.020 | 0.059 | 0.31 |
| 1994 | 5.3 | 2 101.0 | 4.8 | 0.65 | 0.019 | 0.058 | 0.29 |
| 1995 | 5.4 | 2 155.0 | 4.8 | -0.81 | 0.017 | 0.051 | 0.25 |
| 1996 | 6.0 | 2 408.0 | 4.9 | 2.4 | 0.019 | 0.055 | 0.26 |
| 1997 | 6.5 | 2 660.0 | 5.4 | 9.0 | 0.021 | 0.064 | 0.27 |
| 1998 | 7.2 | 2 952.0 | 5.7 | 6.5 | 0.023 | 0.069 | 0.29 |
| 1999 | 7.5 | 3 128.0 | 5.9 | 2.6 | 0.023 | 0.073 | 0.30 |
| 2000 | 7.9 | 3 329.0 | 6.2 | 5.4 | 0.024 | 0.082 | 0.32 |
| 2001 | 8.3 | 3 540.0 | 6.6 | 6.5 | 0.025 | 0.085 | 0.34 |
| 2002 | 9.5 | 4 093.0 | 7.0 | 7.1 | 0.027 | 0.089 | 0.35 |
| 2003 | 11.7 | 5 095.0 | 7.6 | 8.4 | 0.030 | 0.090 | 0.37 |
| 2004 | 14.4 | 6 307.0 | 8.3 | 8.3 | 0.033 | 0.095 | 0.38 |
| 2005 | 16.9 | 7 514.0 | 9.1 | 10.7 | 0.036 | 0.11 | 0.43 |
| 2006 | 21.4 | 9 638.0 | 10.2 | 11.9 | 0.042 | 0.12 | 0.50 |
| 2007 | 30.9 | 14 056.0 | 11.3 | 10.0 | 0.053 | 0.15 | 0.63 |
| 2008 | 35.6 | 16 389.0 | 10.9 | -3.5 | 0.056 | 0.16 | 0.73 |
| 2009 | 26.2 | 12 200.0 | 9.3 | -14.4 | 0.043 | 0.13 | 0.64 |
| 2010 | 23.8 | 11 216.0 | 8.9 | -3.9 | 0.036 | 0.12 | 0.56 |
| 2011 | 28.5 | 13 605.0 | 9.5 | 6.4 | 0.039 | 0.13 | 0.61 |
| 2012 | 28.1 | 13 611.0 | 9.9 | 4.0 | 0.038 | 0.13 | 0.61 |
| 2013 | 30.3 | 14 852.0 | 10.1 | 2.6 | 0.039 | 0.14 | 0.63 |
| 2014 | 31.4 | 15 584.0 | 10.3 | 1.9 | 0.040 | 0.14 | 0.62 |
| 2015 | 27.0 | 13 554.0 | 10.6 | 2.8 | 0.036 | 0.14 | 0.57 |
| 2016 | 27.6 | 13 993.0 | 10.8 | 2.1 | 0.036 | 0.14 | 0.61 |
Picture. Latvian GDP, 1990-2016
Picture. GDP per capita in Latvia, 1990-2016
Picture. GDP growth in Latvia, 1990-2016
Latvian GDP by expenditure
| Index | 1990 | 2000 | 2010 | 2016 | |
|---|---|---|---|---|---|
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Moscow State University named after V.P. Goryachkina
Department: Economics, organization of production in the agro-industrial complex
Test
LATVIAN ECONOMY
Completed:
Merkulova A.V.
Checked:
Dzhanibekov A.K.
Moscow, 2014
Introduction
1.1 Economy of Latvia
2. Industry of Latvia
3. Foreign trade of Latvia
Application
Introduction
Latvia covers an area of 64,589 km? and ranks 122nd among the world's largest countries by territory. Latvia is located in northeastern Europe, in the Baltic states, on the eastern coast of the Baltic Sea. In the north the state borders with Estonia, in the east with Russia, in the south with Belarus and Lithuania.
In the west, the country's territory is washed by the Baltic Sea (Gulf of Riga). total area Latvia is 64.5 thousand square meters. km. The length of the coastline is 531 km.
Most of Latvia's territory is occupied by plains and lowlands. The hills of the Vidzeme Upland are small in height. Most high point Here is Mount Gaizinkalns, whose height is 311 meters.
Forests occupy about 44% of the country's territory. Latvia has a fairly extensive water network - there are more than 3 thousand lakes and 12 thousand rivers. The largest river is the Daugava (we call it the Western Dvina).
In the northern part of the country there is the Kurzeme Peninsula, which ends at Cape Kolkasrags. The capital of the country is the city of Riga.
1. Economic complex of Latvia
1.1 Economy of Latvia
Economic development, factors of the crisis and its course, anti-crisis measures in the Baltic countries - everything is like a carbon copy. The differences are only in macroeconomic indicators.
They are worse in Latvia, better in Estonia. Striving to provide high rates development and to get closer in level to the EU's neighbors in the Baltic with limited own resources forced it to develop in debt. Of great importance for the Latvian economy at the beginning of the 21st century. had an influx of foreign investment.
By the beginning of 2006, the accumulated volume of foreign direct investment (FDI) amounted to 33.1% of GDP, at the beginning of 2008 - already 37.5% ($7.5 billion). During the years of economic boom, Latvia increased its external debts uncontrollably. By the end of 2008, the debt amounted to $44 billion, i.e., it was 8.5 times greater than the country's gold and foreign exchange reserves ($5 billion).
Instead of the expected decline in inflation, its growth continued, reaching 15.3% in 2008, remaining the highest in the EU.
However, soon economic activity began to decrease, production fell, unemployment began to rise, and a shortage of state budget revenues began.
The budget deficit increased from 3.8% of GDP in 2008 to 9.2% of GDP in 2010 and was more than three times the limit set for Eurozone countries. Spain's large budget deficit and poor outlook economic growth have left the country financially vulnerable, even despite government efforts to cut costs, privatize several industries, and improve competitiveness through labor market reform.
1.2 Main features of the Latvian economy
The national crisis, as part of the development of the global financial crisis, intensified, and by January 2013, economic, social and political processes V Latvian society became uncontrollable. In the first quarter In 2014, compared to the same period in 2013, the decline in GDP was 18%. In trade the fall was 25.8%, in transport and communications - 15.4%, in manufacturing - 25.8%, in construction - 28.2%. Spending on food decreased by 4.6%, recreation and culture - by 9.7%, clothing and footwear - by 4.2%.
At the same time, costs for housing and electricity increased by 3.7%, transport - by 1.4%, healthcare - by 0.9%.
Overall volume foreign trade in 2014 decreased by 31.4% compared to 2013, exports decreased by 19.4%, which was mainly due to the strong economic downturn in neighboring countries - Latvia's main trading partners.
EU countries accounted for 69.9% of exports, CIS countries - 14.2%.
The main consumers of Latvian exports were Lithuania (16.1%), Estonia (14.6%), Russia (9.3%), Germany (6.7%), Sweden (5.7%).
The need to develop new export markets contributed to a partial restoration of the competitiveness of Latvian exporters in 2013. So, for example, to countries importing products from a well-known manufacturer alcoholic drinks“Latvijas balzams” was added by Morocco and Slovakia, the largest drug manufacturer JSC “Olainfapm” - Canada and Australia, the famous company “Laima”, which produces confectionery products - Slovakia, Georgia, Azerbaijan, USA, Israel, Canada.
1.3 History of the Latvian economy: transition to the euro
The introduction of the euro in Latvia, or Latvia's entry into the eurozone with the replacement of the common European currency (euro), began on January 1, 2014.
Latvia took the first step towards joining the European Union (EU) on August 27, 1991, when the European Community and its member states recognized the independence of the Baltic countries.
This was followed by a series of thoughtful foreign policy and domestic policy decisions to bring Latvia closer to the EU, and the last and decisive step of this process on September 20, 2003 was a referendum in which 67% of citizens voting voted for Latvia’s accession to the EU. By joining the EU, Latvia pledged to introduce a single EU currency, the euro. The accession agreement provides for Latvia, as well as for other new EU members, the introduction of the euro immediately upon fulfillment of all economic conditions (Maastricht criteria).
This is how it is implemented highest degree economic integration of member states of the European Union.
Based on the Latvian Convergence Program for 2009-2012, which included medium-term forecasts indicating that Latvia would be able to meet the Maastricht criteria in 2012, and the Latvian Economic Stabilization and Renewal Program, the Latvian government set 1 January 2014 as the target date for the introduction of the euro. Benefits from the introduction of the euro in Latvia according to the Bank of Latvia:
Reduced conversion costs and currency risks. There is no need to exchange lats for euros and the associated costs, and the risk of exchange rate fluctuations is eliminated. This means that enterprises have more money left over for development and/or wages, that is, for further increases in well-being. The benefits of eliminating conversion costs are estimated at €70 million per year. This covers the cost of taxpayer funds to participate in the European Stability Facility. Over the past five years, Latvian banks and currency exchange offices have earned about 600 million euros from conversion;
Improving your credit rating. Statistics show that joining the euro area immediately increases the credit ratings of states and their leading banks by 1-2 notches. Benefits - borrowing becomes cheaper and more money remains in the Latvian economy. The euro lowers the cost of capital, allowing more investment and cheaper production and export. This will increase the interest of international banking capital in Latvia and increase its attractiveness on the stock market and valuable papers(both private and public). The economy as a whole will develop more dynamically than without the transition to the euro (the benefit from the introduction of the euro for Latvia’s GDP from 2014 to 2020 is estimated at an additional 8 billion euros);
Reduced interest rates on loans. Reducing creditor markups associated with currency risk will provide additional impetus for development entrepreneurial activity, economic growth and increased well-being, since with a decrease in the state’s credit risk, Latvian entrepreneurs and individuals will be able to take out loans on more favorable terms;
Reducing the cost of government debt. In the coming years, the Latvian state will not be able to earn money to cover international loans, so the only way to service the debt remains new borrowing. For Latvia, as once again a rejected failed country, the price of loans will be up to 1.5% more expensive than for Latvia in the status of a reliable state in the euro zone. Over ten years, this overpayment could amount to about 900 million euros;
Reducing the cost of private debt. More than 50% of loans issued to clients of Latvian banks are denominated in euros. Now that money in Latvia is earned in lats, the cost of the loan automatically increases by the fee charged by banks for converting lats into euros;
Growth in the number of jobs, average wages and budget revenues. This will result in improvement economic development. As a result, the government will also have more possibilities invest and spend on various needs. Of course, the euro won't make people rich overnight, but positive influence transition will become noticeable in the coming years. In turn, one-time expenses related to the transition state level will pay for itself in just one year;
The ability to more reliably plan business financing and savings. Concerns about possible fluctuations in the lat/euro exchange rate are eliminated;
Business insurance. The insurance rate for international contracts in euros is significantly lower than for transactions in low-volume national currencies. Especially if rumors about a possible devaluation are regularly spread;
Easier to compare prices. The ability to clearly compare prices across different countries The EU promotes competition and price stabilization;
International (investment and business) prestige. Latvia cannot afford not to introduce the euro once again, since this will be a signal to investors and entrepreneurs around the world that Latvia’s economy is still not in order. In terms of authority and weight of decisions, a eurozone member state is very different from the countries rejected by the eurozone. This affects the prospects of almost all industries, but today the priority is to restore the confidence of investors capable of producing and trading;
European guarantee fund as an insurance policy. Until now, prosperous EU states have provided guarantees to euro area countries facing debt problems within the framework of the European Financial Stability Mechanism, but from 2013 it is planned to replace the temporary “lifeline” with a permanent support system - the European Stability Mechanism. For Latvia, joining the Euro Club means paying contributions to this fund. This is 28 million lats per year, or 140 million lats over five years. In this way, an insurance policy will be purchased in case Latvia faces a crisis and there is a need for a loan from the fund;
Reducing the threat of panic in the financial market. Panic is often caused by rumors that create distrust in the stability of the national monetary unit, and can be aggravated by the manipulations of malicious investors who have taken out large loans in the national currency and are now seeking to bring down its value.
In this regard, the economic recovery that had continued in Spain since the mid-1990s, with a growth rate of approximately 4% annually, began to decline at the end of 2001 - beginning of 2002.
The cooling economic climate affected employment: in 2001, only 320 thousand new jobs were created in Spain, while in the previous two years this figure was 500 thousand annually. In 2002, only approximately 150 thousand jobs were created. And this despite the fact that Spain has one of the highest unemployment rates among EU countries - about 13% in 2001 and about 12% in 2002.
The unemployment situation was partly alleviated and is still being alleviated by an acute demographic crisis - Spain has the lowest birth rate in Europe. On the other hand, reducing the unemployment rate among the local population is hampered by attracting additional work force from abroad.
Attracting cheap foreign labor makes it possible to increase the competitiveness of Spanish goods in the world, especially agricultural products. In addition, the need of the Spanish economy for additional cheap labor causes an influx of not only legal migrants, but also contributes to an increase in illegal immigration, which is currently a very serious problem for the country. It is estimated that the number of illegal migrants in Spain reaches 300 thousand people, most of whom arrive in the country from North Africa.
It is worth noting that after joining the Eurozone, the unemployment rate in Spain began to fall slowly but steadily.
So, for example, if in 1999 15.9% of the country’s economically active population were officially recognized as unemployed, then in 2004 this figure was only 10.5%.
Another reason for the slowdown in economic growth in Spain in 2002 was the decline in consumer demand, which in previous years had been an important driver of economic development.
The decline in domestic demand occurred despite the fact that, according to the central bank, about 15 billion euros of “dirty” money entered the market last year, which was mainly spent on the purchase of expensive cars.
The main role in the decline in consumption was played by the fact that the Spaniards were no longer so optimistic about the future. IN this year A further decline in consumer demand is expected.
Before the transition to the euro, the inflation situation was more favorable. Thus, in 2001, the annualized price growth rate was 2.7%, which is significantly less than a year earlier. True, this decrease is mainly due to more low prices on energy, while food and non-alcoholic drinks rose in price by almost 6% in December, and hotel and restaurant services by 5%.
In the first half of 2002, as in many other countries of the Eurozone, there was a significant increase in prices. The rise in inflation in Spain, the likes of which has not been seen for 19 years, was caused by the consequences of the transition to the euro.
This conclusion was reached by experts from the influential Consumer and User Organization, who published the results of their research. This report noted that the Spanish government did not take promised measures against “price rounding” during the transition to the euro and itself increased the prices of some government-controlled basic goods and services. The largest Spanish trade unions also blamed the government for the surge in inflation, but emphasized its overall economic policy, which, in their opinion, in every possible way slowed down the growth of wages and encouraged the growth of incomes of entrepreneurs. Be that as it may, in 2002, overall, the inflation rate in Spain increased by about 0.8% and reached 3.5%.
Prices for shoes and clothing increased by more than 7%, hotels, bars and restaurants by 6%, basic food products by almost 5%, and especially vegetables. Spain has not seen such a sharp rise in prices since the early 80s, when the country experienced an economic crisis.
The Spanish government has admitted that the transition to the euro played a role in increasing inflation.
In 2003-2004 It became clear that the problem of inflation that arose as a result of the transition to the euro had not been fully resolved. Thus, in 2003 the average inflation rate was 2.9%, in 2004 - 3.0%. In October and November 2004, the annual inflation rate exceeded 3.5%, and this despite the fact that according to EU standards, which were a condition for countries to be admitted to the euro area, inflation should not exceed 2.0%.
It continued to be a serious problem in the 2000s low level competitiveness of Spanish industry, which has become even more noticeable since the transition to the euro.
Foreign concerns continued to play the main role in it. For example, they own almost all automobile factories, producing approximately 6% of the country's GDP.
About 80% of their products were exported. Only in a few industries were domestic companies able to occupy leading positions. Despite the fact that many jobs have been created in Spain with the participation of foreign capital, a large number of foreign investors had significant negative sides. Thus, foreign concerns carried out R&D, as a rule, outside Spain; they did not invest capital in the development of Spanish manufacturers themselves. The expansion of the European Union to the east has further worsened the situation for domestic producers.
Just like Spain once upon a time, the new EU members attracted foreign investors with relatively cheap labor and prospects for developing new markets.
2. Industry of Latvia
Latvia is a state with an industrial-agrarian economy. The main industries are: mechanical engineering, light industry, pulp and paper, construction, pharmaceuticals. There are few mineral resources in the country, so ferrous metallurgy enterprises are forced to work on imported raw materials.
Industrial production of the country in to a large extent depends on imports of fuel, electricity, semi-finished products and raw materials.
The textile, clothing, leather and footwear and fur sectors of light industry and amber fishing are well developed.
The flax industry uses local raw materials. There are a large number of enterprises Food Industry. It specializes in the production of butter, cheese, condensed milk, bacon, sausages, canned fish and fish processing products.
2.1 Fuel and energy complex of Latvia
A new plant for the production of cooling systems, Thermotechnik Lettland, owned by the German concern AKG, began operating in Jelgava, Latvia. The company's products will be supplied to manufacturers of such famous brands as Porsche, Ferrari, Bentley, Volvo and DaimlerChrysler.
A total of 12 million euros are expected to be invested in the new production. The AKG concern, which already owns 12 factories in Germany, China, Great Britain, the USA and France, has been working on the project in Jelgava since July 2003 together with the Latvian Investment and Development Agency.
IN next year the plant produced 50 thousand radiators, a year later - 80 thousand, and in 2013 - 200 thousand.
According to the CFO of AKG Thermotechnik Int. Detlef Reinsberg, AKG, about to build its first Eastern Europe plant, chose Latvia because of its favorable geographical location, as well as the low cost of labor (in this Baltic country it is almost 30% cheaper than in Germany).
2.2 Pulp and paper production
The idea of building large pulp mills hovered over all three Baltic countries at the beginning of the 21st century.
And this is not surprising.
Firstly, all three republics are quite rich in forests, and wood processing has traditionally always been an important component of their industry.
Secondly, they have before their eyes the experience of the Scandinavians, who have become leaders in the European market in the production of pulp and paper, which are among the highly profitable and growing industries.
Paper and cardboard production exists in the Baltics, but there is not enough of our own cellulose (waste paper does not help, and besides, not everything can be made from it).
Now in the Estonian town of Kehra alone, Horizon Pulp and Paper Co produces about 50 thousand tons of softened, unbleached wood. Under Soviet rule, cellulose and wood pulp were produced in Latvia at the pulp and paper mill in Sloka (up to 90 thousand tons).
However, after leaving the USSR, for various reasons (mainly environmental), these factories were closed.
The republic has enough of its own forest. Forests occupy about 40%. Therefore, the state strategy and program has long been tasked with building technically advanced and environmentally acceptable pulp production.
At first, the scale of production and the nature of the products were motivated solely by internal needs, but there was also talk of building giants oriented towards large-scale exports. The government of the republic secured a promise from the Swedish Sodra Cell and the Finnish Metsaliitto (one of the leaders in the global pulp and paper market with an annual turnover of about $9 billion) to invest $900 million in the construction of a plant in Jekabpils with a capacity of 600 thousand tons of cellulose per year. Investors, who are the largest timber processors in Scandinavia (Metsaliitto manages 200 thousand hectares of forest), have undertaken to sell products through their worldwide retail chains. The company began operating in 2005.
To implement the project, the Baltic Pulp company was created, in which 33% each belongs to the Latvian government and the Swedish Sodra, and 34% to Metsaliitto. To ensure the utilization of the enterprise, the company took control of a third state forests republics. For now, the government is ready to give up 150 thousand of the 1.4 million hectares (it is estimated that up to 14% of all Latvian forests are required to load the plant). Approximately the same amount of land is planned to be found in the private sector.
3. Foreign trade of Latvia
Spain should join the G8. The basis is its economic success. This statement was made by the head of the Spanish government, Jose Maria Aznar, on the eve of the Brussels meeting of EU finance ministers, at which Spain criticized the budget policies of the two current G8 members - Germany and France. At the same time, two groups of American congressmen prepared drafts of an appeal to George Bush demanding that Russia be expelled from this club for betraying democratic principles.
Spain is rapidly gaining economic weight. This is the main meaning of most of the messages addressed to the rest of the world in recent days by official Madrid.
There is good reason for this statement. More than half of the jobs created by eurozone economies in 2002 came from Spain. If in 1976 and 1996 the country had 12 million workers, then in 2004, eight years after the Aznar government came to power, there will be 17 million - more than at any time in Spanish history.
During the years that the current cabinet has been in power, unemployment has been halved. During all these eight years, Spain's GDP growth rate was more than 3% per year. In the third quarter of 2003, the country's economy grew by 0.7%, growing almost twice as fast as the euro area average. In the work carried out, the following factors influencing the Spanish economy can be clearly identified:
Low growth rates in EU countries, where the bulk of Spanish exports go;
Economic difficulties experienced Latin America, whose markets have higher value for Spain;
Changes in domestic demand in the country;
Low interest rates and growing employment;
Low cost of loans;
Tax cuts;
The fall in oil prices and the general strengthening of the world economy, as well as Spain's membership in European Union and inclusion in the eurozone.
At the end of the year, according to forecasts, the growth of the national economy of Spain will reach 2.3-2.4%, the total growth of the twelve economies of the eurozone - 0.4-0.5%.
Country budget in last years almost perfectly balanced: its deficit this year will be less than 0.5%.
The ECB also contributed to this economic miracle. The 2 percent discount rate he established is the lowest in Spanish history. Cheap loans caused a surge in demand for housing. The government's tax cuts, which came into force earlier this year, saved Spanish taxpayers 3.8 billion euros ($4.5 billion), thereby increasing effective demand. economic market economics
Spaniards' consumer spending by October was 3.2% higher than a year earlier. Such successes, according to Spanish Prime Minister Jose Maria Aznar, will soon force everyone to consider his country, now ranked eighth on the list of the world's largest economies, as a member of the G8.
As if clearing space for his arithmetic calculations, American senators Lieberman and McCain and the US House of Representatives said they intend to persuade George W. Bush to expel Russia from the Club of Eight for undemocratic behavior.
However, apparently, the goal of the Spanish leadership is not to take anyone's place in the G-8.
Main targets latest performances Aznara - France and Germany, which at the Brussels meeting of EU finance ministers were officially allowed to remain violators of budget discipline for another year. The Spanish Prime Minister directly linked their more than modest recent economic achievements to financial permissiveness, which, in his opinion, depreciates the value of the European Stability Pact. And contrasted these failures exemplary behavior Spain with all its beneficial consequences.
The equalization of the economic ranks of Spain and its main opponents, which he carried out on credit, served as an additional argument in this dispute. The situation in the world, according to Aznar, is an enlarged reflection of the European one. If after the 1990 Gulf War there were three engines of economic growth in the world - the USA, Japan and Germany - today there is only one - the USA. main ally Spain in the fight against terrorism.
List of used literature
1. Butorina O.V. Spain: economic recovery strategy: M. - 2011
2. Pogorletsky A.I. Economy foreign countries: M. - 2010
3. Magazine World and national economy No. 2, 2007
4. Information and analytical center "Mineral".
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Latvia is a state with an industrial-agrarian economy. Main industries: mechanical engineering, food, woodworking, light, construction materials, chemical. The industry is experiencing crisis phenomena associated with structural changes and reorientation towards the production of products that meet the requirements of the global market. St. is involved in agriculture. 18% of the economically active population, agricultural land area 2.57 million hectares. The main direction of agriculture is meat and dairy farming.
The share of industry in GDP in 2002 was 18.7% (including manufacturing 14.8%), trade 19.9%, services 11.1%, construction 6.1%, other sectors 44.2% .
The transport network is developed and has great ramifications. Railways account for 50% of cargo transportation, their length is 2.4 thousand km; pipelines - 29% (oil pipelines - 437 km, gas pipelines - 1600 km), sea transportation - 14%, road transportation - 7% (road length 20.6 thousand km, of which 7.5 thousand km are asphalt paved). Ventspils is the largest port in the Baltic Sea region and one of the 15 European ports with the largest cargo turnover.
L. consistently carries out coordinated efforts by the IMF and the World Bank economic reforms and is a country with market economy seeking to join the EU to strengthen economic security. One of the main conditions for joining the EU is membership in the WTO (L. joined this organization in 1999). Another important condition is macroeconomic stability.
Over the years of its sovereign existence, the country has experienced a fairly long (6 years) and deep economic recession. In 2000, GDP in Latvia amounted to 61% of the 1990 level, the volume industrial production decreased by 51%. The development of the Latvian economy was negatively impacted by the Russian currency and financial crisis of 1998. Of the 50,355 enterprises operating in the beginning. 1998, 3303 enterprises were liquidated. The food industry suffered more than other industries, since about 50% of the products produced were exported to the Russian Federation, incl. fish canning - 90%. IN fishing industry By February 1, 1999, 43 enterprises had completely stopped working, and 140 enterprises had partially stopped working, and, as a result, unemployment increased. Foreign trade turnover with the Russian Federation decreased significantly (by 58%), the volume of exports - by 69%, imports - by 56%, which contributed to a further reorientation to Western markets. Slow growth in industrial and agricultural production began in 2000.
Dynamics of GDP in Latvia in the 1990s. followed a trend common to all transition economies: a strong decline was replaced by unsustainable growth. At the same time, exports and foreign investment remained the main sources of growth in conditions of limited domestic demand. The volume of GDP (in constant prices) in 2002 amounted to 4978.1 million lats, an increase compared to 2001 - 6.1% (see table). Industrial products worth 1987.6 million lats were produced and sold, an increase of 5.8%. Growth was observed in the production of electrical equipment (24%), chemical, rubber and stationery products (16-13%), mechanical engineering (8%), food industry (6%). There was a significant increase in construction - 10.8%, especially new buildings (34%). The volume of retail trade (LVL 241 million) increased by 18%, wholesale trade by 12%. The increase in agricultural production of 4.1% was due to an increase in grain harvest (1 million tons) by 10.8%. Meat was produced (92.1 thousand tons) - 3% more, eggs (508.6 million pieces) - 12%, and milk (811.5 thousand tons) - 4% less. Revenues from the service sector increased by 5.7% (especially computer services - 27%, design and architectural work - 27%, lawyer consulting - 14%).
The volume of exports of Latvian goods in 2002 compared to 2001 increased by 12.1%, reaching 1.409 billion lats, imports increased by 13.4% - to 2.497 billion lats, Latvia's foreign trade deficit amounted to 77.3% of exports (in 2000 - 71, in 2001 - 75.2%). The EU countries accounted for 60.4% of exports and 53.1% of imports, while the CIS countries accounted for 10.2 and 13.1%, respectively. The main export partners were: Germany (15.5%), Great Britain (14.6%), Sweden (10.5%), Lithuania (8.4%), Estonia (6.0%), and import partners - Germany (17.2), Lithuania (9.8%), Russia (8.8%), Finland (8.0), Sweden (6.4%). The negative balance in trade with the EU countries amounted to 471.5 million lats, the CIS - 186 million lats. The volume of imports exceeds exports to Germany, Lithuania, Estonia by 2 times, to the Russian Federation by 2.5 times, and to Finland by almost 7 times.
The unstable dynamics of the world economy and negative trends in the development of EU countries (slowdown of economic growth) in recent years have a direct impact on the Latvian economy. This is directly related to the narrowing export opportunities and the constant growth of imports. L. managed to partially compensate for losses in the EU markets by entering the markets of the CIS countries, mainly the Russian Federation.
Thanks to the activity of entrepreneurs, the Russian Federation remains a major trading partner of Latvia. In 2000-02, the volume of exports to the Russian Federation, mainly mechanical engineering products (40%) and food products, although increased significantly, remained at an insignificant level. About 60% of imports from the Russian Federation are oil, petroleum products, gas, and mineral fertilizers. Metals, fertilizers, plastics, and wood are also imported for the production of lumber exported to the West.
The Russian Federation ranks 4th ($120 million) in terms of foreign investment in the Latvian economy, behind Sweden, the USA and Germany. RAO Gazprom has invested in gas marketing enterprises (29.7% of the shares of JSC Latvijas Gaze), the LUKOIL company has a tank farm for storing oil and petroleum products on the territory of Latvia, and is participating in the expansion of the port of Ventspils. In the first quarter 2003 Russian oil was not exported through the port of Ventspils, which caused L. losses in the amount of more than 200 million US dollars. About 1,400 enterprises and firms with the participation of Russian capital have been created and operate, mainly engaged in trade and intermediary activities.
Transit of Russian cargo remains an important element national economy L. The volume of these services significantly exceeds commodity exports to the Russian Federation in value terms (services are provided for the transportation and transshipment of oil and petroleum products, fertilizers, metals and a number of other goods). 11-13% of total exports pass through the port of Ventspils Russian oil. Revenues from the transit of these cargoes account for about 30% of the Latvian budget ($400-500 million per year).
The reduction in demand in foreign markets had a downward impact on the dynamics of consumer prices. The trade deficit has increased significantly. The increase in the balance of payments deficit was counteracted by a very significant influx of investment from abroad. Volume accumulated at the beginning 2002 foreign direct investment (FDI) was $2.1 billion, or $857 per capita. The largest foreign investors are Sweden, Germany and Estonia (36% of all foreign investments).
The economic development of Latvia in 2003 was still determined by the dynamics of demand in the domestic market. Some growth in consumption became possible due to an increase in wages and expanded opportunities for obtaining loans from commercial banks.
There is a two-level banking system in Latvia, consisting of a central bank (Bank of Latvia) and 23 commercial banks. In 2002, the volume of loans issued to enterprises and individuals increased by 35.6%, average rates on long-term loans in national currency decreased to 7.4%, in foreign currencies - to 5.8%.
The consolidated budget deficit reached 2.5% of GDP. Total government debt to end. 2002 amounted to 756.2 million lats, external debt - 464.7 million lats.
In 2002, GDP per capita reached 3.6 thousand euros, which is 30% of the EU average. The average monthly wage is $269, the minimum wage is $84, the average pension is $95, the average family income per person is $109. Food accounted for 50% of all expenses. In Latvia, 10% of the population (the richest) have a monthly income of St. $260, 30% (average income) - from $130 to $260 and 60% (low income) - from $40-130.
The number of employees in 2002 amounted to 989 thousand people, increased by 3% compared to 2001. 89.7 thousand people were registered. unemployed (in 2001 - 91.6). The unemployment rate remains quite high, increasing from 7.7 to 8.5%.
Latvia is an industrial-agrarian country. Leading industries: mechanical engineering and metalworking (power engineering, electrical, radio-electronic industry, production of communications equipment and instrument making, transport, and agricultural engineering). The chemical and petrochemical, light, food, forestry, woodworking, pulp and paper, glass and porcelain industries are developed. Latvia is famous for the production of perfumes and cosmetics. The country has developed artistic crafts: leather processing, amber processing, wood carving, embroidery.
The main branch of agriculture is livestock breeding (dairy and beef cattle breeding and bacon pig breeding). Rye, wheat, long flax barley, sugar beets, and fodder crops are grown in the republic. They are engaged in potato growing, vegetable growing, beekeeping, and fur farming. Export: products of mechanical engineering, light and food industries
The share of the service sector in Latvia's GDP is 70.6%, industry - 24.7%, agriculture - 4.7%.
In 1999, Latvia joined the World Trade Organization, and in 2004 - the European Union. In the 2000s, the economy grew steadily by 5-7% per year (12.6% in 2006, 10.3% in 2007) until the economic crisis began in 2009.
At the end of 2007, Latvia was in third place in the post-Soviet space in terms of GDP growth rates. Only Azerbaijan and Armenia were ahead of Latvia among the countries of the post-Soviet space.
In 2008, Latvia became the leader among the EU countries in terms of the number of people living on the verge of poverty; 26% of the population were considered poor.
In 2009, Latvia's GDP fell by 17.8% - the worst GDP dynamics in the world
· Policy
Latvia is a parliamentary republic, where supreme power belongs to the legislature. In the Latvian parliament, the Seimas, to enter which a party must overcome a 5% barrier, 100 deputies are elected, exclusively from party lists.
· International trade
The main export goods of Latvia (2008): iron and metal bars - 8.2%, electrical machinery and equipment - 6.2%, machinery and equipment - 6.1%, lumber - 4.5%, knitted and textile clothing - 3.5%, pharmaceutical products - 3.3%, round timber - 2.8%, wooden products - 2.5%.
Russia and the Baltic states remain traditional trading partners, but EU membership has allowed Latvia to significantly expand trade relations with European states, especially Germany, Sweden and Great Britain.
Latvia has signed an agreement with Lithuania and Estonia to establish a customs union, and therefore the volume of trade between these countries is quite large
· Inflation
Inflation has reached double-digit percentages since August 2007, according to the Statistical Office of Latvia. Consumer price index (inflation index) on an annualized basis:
Table No. 2
· Healthcare
As of April 2009, Latvia ranked last, 31st, in the European Healthcare Consumer Index.
A one-time visit to a family doctor costs at least 2 euros, a visit to a specialist - from 7 euros, one day of hospital stay - 17 euros. A special situation arises when calling an ambulance.
In Latvia, there is a concept of “unreasonable call for an ambulance” - this is a call for an ambulance in the absence of a clear threat to life. The patient is often unable to determine and classify the level of threat to health, and medical institutions are asked to do this by a dispatcher over the phone. The cost of such an “unfounded call” ranges from 48 to 118 euros, and according to statistics, every fifth ambulance call in Riga is listed as “unfounded”.
· Labor resources
Unemployment rate - 16.6% (2009).
Since mid-2008, there has been constant growth unemployment. According to the State Employment Agency, the unemployment rate in 2009 increased from 7 to 16%. According to Eurostat, at the beginning of 2009, 12.3% of the population were unemployed, and at the end - 22.8%. This is one of the highest indicators among EU countries.
According to the indicators of the first quarter of 2009, Latvia had the most high percent(28.2%) of unemployed youth among all EU countries.
You should know that unemployment benefits in Latvia are paid to a specific resident for a not very long time (up to nine months) after the loss of official work, and the status of unemployed is retained for such a person only if certain rules(today this is an independent active search for work with regular reports), otherwise such a person is transferred to the category of self-employed, even without having actual income. Since the effectiveness of the Latvian Employment Agency is low, many unemployed people try to maintain their status only while receiving benefits. The number of such persons cannot be calculated even by the Latvian Ministry of Welfare, therefore, the real percentage of unemployed working-age residents of Latvia may turn out to be much higher.
· Taxation
On December 12, 2008, parliament approved an increase in standard VAT from 18% to 21%, reduced VAT from 5% to 10% ( baby food, medicines, electricity, heating and public transport), VAT on special services - from 5% to 21% (newspapers, books, cable television, water supply, waste collection, funeral parlor services, hotels, etc.). The changes came into force on January 1, 2009. With the change in VAT, the tax collection in the country fell sharply, and therefore the current Prime Minister of Latvia, Valdis Dombrovskis, announced the possibility of raising the VAT to 24%.
Since 2009, the personal income tax rate has been reduced from 25 to 23%. However, by the end of the year it was decided to raise it from 2010 to 26%.
· Social protection system
On July 1, 2009, a law came into force providing for a reduction in pensions by 70% for working Latvian pensioners and 10% for non-working ones. As a result, over the next month (July), the number of working pensioners has already decreased by as much as 42.3% - more than 25,000 pensioners were forced to resign of their own free will. In December 2009, the provisions of the law on pension cuts were declared unconstitutional by the court.
Energy
The state's energy sector largely depends on imports of fuel and electricity.
However, there is a significant own source - a cascade of hydroelectric power stations on the Western Dvina River, which provides the country with up to 3 billion kWh per year (50% of consumption) of especially valuable peak electricity, but the river’s potential is underutilized in the amount of about 1 billion kWh h (HPP of Latvia). Net electricity imports amount to about 1.5 billion kWh per year.
There are industrial peat reserves of about 480 million tons, and timber reserves. Some geologists suggest the presence of small oil fields in Latvian territorial waters in the Baltic.
Various projects in non-traditional energy are being implemented, for example, the Daugavpils SES project (4.6 MW), and as of 2009, wind power plants with a total capacity of about 28 MW have been installed in the country.
In the first quarter of 2010, compared to the first quarter of 2009, the decline in Latvia's gross domestic product (GDP) was 6%, reports the Central Statistical Bureau. In trade ( specific gravity in the structure of GDP - 16.8%), the decline was 8.1%, in construction (5.7%) - 43.2%. An increase was registered in the transport and communications industry (12.5% of GDP) - by 2.3%, in the manufacturing industry (10.8%) - by 6.8%.
Thus, Latvia became one of the few countries that showed a significant drop in GDP at the beginning of 2010 compared to the crisis year of 2009.
Crisis in Latvia
Threat of default and devaluation
Since the beginning of the crisis in Latvia, when the country's GDP began to decline and the overall economic situation began to deteriorate, the country was faced with a serious threat of default of the national currency - the lat. According to many experts, in order to avoid default, the Latvian authorities will have to announce the devaluation of the lat. The problem is that devaluation usually boosts the economy of countries only with developed domestic production, but in the case of Latvia (where imports significantly exceed exports) this not only does not promise economic growth, but also risks leading to consequences no less disastrous than the default itself . If the devaluation of the lat occurs, the residents of the importing country will overnight become poorer exactly to the extent that the purchasing power of the devalued national currency will decrease.
It is believed that the devaluation of the lat will also have a detrimental effect on the economies of countries such as Lithuania, Estonia and even Sweden. However, as experts say, if no radical positive changes will not happen in the economic sphere of the Latvian state, the residents of Latvia will one way or another have to prepare for either default or devaluation. According to the President of the Bank of Latvia, Ilmars Rimsevics, devaluation could destroy the Latvian economy overnight.
Given this threatening situation, the Latvian government publicly categorically denies the possibility of devaluation of the lat, however, the possibility of devaluation is discussed by the Latvian authorities, for example, during meetings with creditors represented by the IMF. In order to prevent panic among the population, as well as to prevent the discovery of the real economic situation In the country, the Latvian government passed a law back in 2007 providing for penalties of up to six years in prison for spreading any “rumors” about the devaluation of the lats or statements about the country’s financial system. This law is unique in the history of independent Latvia, and, according to economic experts, directly violates freedom of speech and opinion. The result of the new law was not long in coming, and its first victims were economist Dmitry Smirnov, who published an expert assessment of the future of the Latvian economy, and musician Walter Friedenberg. The first was detained for several days, and the second was limited to interrogation. It should also be noted funny case, when the Latvian Security Police became interested in users of one of the local women's web forums, where opinions were left regarding the performance of the country's banking system. Many foreign economists and public publications hastened to publish their opinions about financial system countries.
Also, the President of the Bank of Latvia, Ilmar Rimsevics, believes that if the economic situation does not improve in the near future, the state will become insolvent, and the introduction of a coupon system is possible already in 2009.
The authoritative publication The Wall Street Journal believes that the lats are already “supported” only by the trust of residents, and the critical point will be reached in the fall of 2009, when many unemployed people will lose lats benefits - then devaluation risks occurring.
Collapse of the education system
State Secretary of the Ministry of Education and Science Marek Gruszkiewicz says that up to 10,000 teachers may lose their jobs in the near future. In turn, the Minister of Education and Science Tatiana Koke claims that from September 1, 2009, up to 4,000 teachers will lose their jobs, and Latvian schools will be transferred to local governments, which threatens the closure of many of them. Also, from September 1, teachers’ salaries will be reduced by 50% and amount to ~246 euros per salary. At a meeting with Liepaja teachers, State Secretary of the Ministry of Education Marek Grushkevich noted that the Latvian state had gone bankrupt and education had been “ruined into powder.”
Also, by decision of the Cabinet of Ministers, all schoolchildren and students have now lost a permanent 50% discount on travel in the city public transport provided by the state budget, however, the mayor of Riga Nil Ushakov stated that the Riga City Council will now undertake obligations to provide all previous discounts to Riga pupils and students at the expense of the city budget.
Since September 2009, as part of cost optimization, according to the decision of the Riga City Council, it was decided to close 10 schools in Riga (of which 9 are Russian), and in just three years it is planned to liquidate a total of 16 schools. As a result of this reorganization, about 400 teachers may lose their jobs. Since the beginning of the 2009/2010 academic year in Latvia, 54 schools have been liquidated and 66 have been reorganized. In Riga schools, 570 people left their jobs, in Latvia as a whole - about 1,700.
In total, the Ministry of Education and Science has already agreed on the liquidation of 36 and the reorganization of 68 schools over the next few years.
Real estate crisis
The rapid rise in prices in the real estate market, associated with easy obtaining of mortgage loans from Latvian banks and very active speculation in the market, was one of the factors in the growth of inflation. To combat inflation, the Latvian government took a number of measures, which provoked a collapse in the real estate market and subsequent economic recession - a sharp slowdown in GDP growth. Housing prices in Latvia in the second quarter of 2008 fell by 24.1% compared to the corresponding period in 2007. Prices continue to gradually fall, and in March 2009, a square meter of housing in residential areas of Riga already costs an average of 606 euros.