Latvian economic gambit

 

Part 1

Latvia has survived one of the toughest economic programs in the world, including a deep recession, but without devaluing its currency, without street riots, and has already returned to economic growth.

The resilient country has been held up as an example to the irate Greeks. But this former Soviet republic, on the Baltic Sea coast, is only now realizing the price of three years of austerity: 10% Latvians have left the country since 2000, and half of them in the last three years.
Preliminary data from this year's census showed that there are only 1.9 million people in the country, while 2.2 million are officially counted. According to sociologists, the country has avoided protests (the economy has stagnated faster than during America's Great Depression) thanks to weak labor unions and emigration. Mārtiņš Bondars, a former bank executive, jokes that "Greeks demonstrated in the streets, while Latvians bought a one-way airplane ticket". After joining the EU, in 2004, Latvia was one of the fastest growing and most overheated economies. Then, in 2008, Lehman Brothers' went bankrupt, the global financial crisis began, and the country lost cheap credit. As a result, Latvia lost a third of its GDP and the government introduced a so-called "internal" devaluation, which Greece is now trying to replicate.
The statistics shows the scale of the troubles that have befallen the country's citizens. Since 2009, Latvia's economy has shrunk by a quarter. Unemployment from 2007 to 2010 tripled, reaching 21%. The number of civil servants was reduced by 30%; in the public sector, salaries fell by 40 percent. The consumption sector collapsed.
To be continued...

 

Based on foreign press materials for ForTrader. ru