The impact of the Covid-19 crisis on the Latvian economy as a whole has been smaller than initially expected. This has been confirmed by a new study by the Association of Economists, but, which is not so good, both Lithuania and Estonia are emerging from the crisis faster than Latvia.
With the easing of restrictions, the Latvian economy is beginning to recover. Recent data show that unemployment has fallen slightly, consumer prices are rising, inflation is around 2.5%, and retail sales have increased.
The latest GDP figures are for the first three months of the year, when our economy is still in recession, but all indications are that the second quarter will be a very big plus in the year, especially given how deep the crisis hit last spring.
This week, the Association of Economists 2010 also expressed its opinion on current issues in the national economy, which conducted a study entitled “Corononomics in Latvia: Impact, Policy Response and Return to Growth”.
The main conclusions – this is very different from the crisis in 2009. Latvia’s economy and finances have been well prepared. Although this time has been and still is difficult for some sectors, the overall effect is much less than initially forecast and the Latvian economy is recovering from the crisis without a long-term shock. It is possible that the pre-crisis level of the economy could reach even this year, and the discussion called for thinking again about our structural problems.
“It’s not just about supporting companies and promoting exports. It’s all good and beautiful, but manufacturing and exports don’t feel so bad at all. We are one of the economies that have suffered the least in terms of exports. We are sorting out the problem of our main resource – human resources – in the Latvian economy, ”says Līva Zorgenfreija, Chief Economist of Swedbank.
It is about the education system, skills development, retraining. About a year ago, there was a lot of talk about the restart and transformation of the economy. As a result of the Covid-19 crisis-induced restrictions, many industries had come to a standstill and the playing field leveled off. Covid-19 crisis as an opportunity.
But hasn’t it already been missed? For example, in our neighborhood, the first quarter of the year, while we were still stagnant, was already on a growth path. Latvia risks falling behind.
“It may have been successful in curbing the spread of the virus, less painful for the economy. Economic support instruments have also been slightly more and more targeted. Thus, at the beginning of the summer, we can see how much people spend money, both in terms of GDP and internally, and there we are a little behind, ”says Mārtiņš Āboliņš, an economist at Citadele Bank.-
At the same time, what happened with Covid-19 is not decisive in this national competition. All this is still ahead and depends on how Latvia will spend billions in Europe in the coming years.
“Like a casino, conditionally. Will we place the bet correctly. And that is crucial, because the whole of Europe will put it. I am afraid it will be the same as before, that there will be very big differences in the results. It is already in our interest to be with those leaders, ”says Dainis Gašpuitis, a macroeconomic expert at SEB banka.
Latvia has submitted a plan for the financing of the European Reconstruction Fund for 1.82 billion euros.
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