Olaf Zvejnieks: The frozen economy

Last week it appeared that Latvia’s economic ship is currently trying to sail against the wind, which is created by the low demand in Latvia’s main export markets in Europe and the policy of the Central Bank of Europe to prevent inflation.

The headline is so strong that all economists who predicted the results of the Latvian economy in the second quarter of the year were seriously mistaken – they expected a relatively optimistic economic growth of 1.1-1.2% a compared to the same period of the previous year, unfortunately. real yield is almost invisible 0.1%. Taking into account that the data of the first quarter was also the same as the same period of the previous year, the half year indicates a rather sad economic outlook for the year.

Last year Latvia was predicted to be the most vibrant of the Baltic economies this year, it’s time to say goodbye to this forecast –

Lithuania is the strongest Baltic economy so far with 1.4% growth in the second quarter.

The economy of Estonia, caught in a severe crisis, continues to slide down according to forecasts – a decrease of 1.7% compared to the second period of the previous year, the decline of its northern neighbor has been ‘ going on for two years already.

However, Latvia has nothing in this area either – in the last two years, there was only one quarter when the economic indicators looked promising and growth was 1% higher compared to the see last year’s corresponding period. , in everything else we have changed around zero. In general, it can be concluded that the rapid fall of inflation and the first reduction in basic interest rates by the European Central Bank have not brought any noticeable improvements to the Latvian economy – we have gone to -into a period of constant stagnation.