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LATVIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 9,671 8,406 7,500 94
         
GNI per capita
 US $ 4,070 3,480 3,230 79
Ranking is given out of 208 nations - (data from the World Bank)

Books on Latvia

REPUBLICAN REFERENCE

Area (sq.km) 
64,589

Population
2,306,306

Principal 
ethnic groups 
Latvians 52.0%
Russians 34%
Belarusians 4.5%

Capital 
Riga

Currency 
Lats

President
Mrs Vaira 
Vike-Freiberga




Update No: 300 - (01/01/06)

It is a curiosity that the most successful countries of late on statistics of growth, the Baltic states, are eager to join up with those that are the least successful right now upon the same criterion, those in Euroland.
Snobbery is a very important phenomenon and accounts for a lot in life - notably mimesis: admiration and imitation of the successful. The Latvians, who are still very poor, despite recent fast growth, are convinced that the Europeans and Americans have the secret formula of success; otherwise how are they so rich? 
The Latvians have always been governed by someone else - not very successfully. But they remain convinced that their saviour lies without - in the EU.

Latvia's crossroads
President Vaira Vike-Freiberga has said that any failure to adopt the euro by 2008, the country's stated target, would badly affect Latvia's economy. 
The president, speaking on Latvijas Radio, explained that the deadline is threatened by the country's high inflation. "Personally, I think that inflation in Latvia has reached a dangerous level, and the state has to do something about it," she said. "However, the decision on what to do should be taken by the Cabinet of Ministers and the Prime Minister." 
Consumer prices have crossed the 7 per cent threshold, Vike-Freiberga said, and as a result the country has significantly exceeded the limit set by Maastricht, the set of criteria that regulates the eurozone. Specifically, the president is concerned about Latvia's position vis-a-vis Estonia and Lithuania, who seem to be on track to adopt the common currency in 2007. 
"Taking into account that we are already planning to adopt the euro a year later than our neighbours, if we make this gap even wider, it might have a very negative impact on Latvia's financial deals, on Latvia as a financial centre and on our economy as a whole," she said.
Latvia currently has the highest inflation in the EU. In October, prices rose 7.6 per cent year-on-year. Government officials have tended to blame external factors - high energy prices - for the trend, while Bank of Latvia executives have pointed out fiscal policy and heavy consumer spending for the increase in prices. 

In November, the Bank of Latvia raised the mandatory reserve requirements for commercial banks in an effort to curtail the amount of lending to consumers. 
Meanwhile, the statistics bureau reported that wages have been growing faster than consumer prices. In the third quarter, wages rose 17.7 per cent, while consumer prices increased 6.5 per cent. 
Net wages increased by 17 per cent in the public sector, with 15.1 per cent growth in the budget-financed institutions and a 21.1 per cent increase among commercial companies with central or local government-capital participation. The average net wage monthly in Latvia's public sector reached 201.6 lats (286.9 euros) in the third quarter. 
Compared with the second quarter of 2005, the average monthly net wage of employees in the private sector in the third quarter of 2005 increased by 5 per cent.

                                               ****

To end on a light note to fit the festive season, we replicate a piece on 'prancing polar bears,' Latvian-style. 
There is a serious side to the matter too; such an event could never have happened under communism before 1991. It would have been condemned as the epitome of petty-bourgeois frivolity. 
The real proof of having freedom is that one can do something completely gratuitously and without utilitarian rebate, rhyme or reason:-

Ice Hockey: Latvians plan bears show (but proper size boots needed)
From RIGA news service:
Latvian organisers of the 2006 ice hockey world championship are considering opening the event with a troupe of ice-skating polar bears. The world championship is taking place in May in Riga.
Riga Circus has said it had proposed that the Baltic state's government help fund the prancing polar bears for the event -- and Prime Minister, Aigars Kalvitis, said it was a "brilliant" idea. 
Riga Circus deputy director, Lolita Litinska, said it would be a spectacular show and the first of its kind, but that government money was needed to fund it. "It is possible for the polar bears to ice-skate if they have been trained at a very early stage and have proper size boots," she said. 
Kalvitis' spokesman said the government planned to listen to the proposal from the circus and take it into consideration. "The Prime Minister said that it could be a wonderful show to have polar bears skating at the opening ceremony," the spokesman said. 

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AVIATION

airBaltic, Donbassaero on Riga-Dnepropetrovsk route 

Latvian airline, airBaltic, and Ukrainian airline, Donbassaero, one of the leading carriers on the Ukrainian domestic market, signed a code share agreement on December 5, New Europe reported.
Donbassaero has its main centre in the eastern Ukrainian city of Donetsk and this agreement will give Donbassaero and airBaltic passengers an improved service and access to each other's networks. airBaltic began flights from Riga to Dnepropetrovsk, at the beginning of November. Throughout the winter season, airBaltic will operate flights to Dnepropetrovsk three times per week, on Mondays, Wednesdays and Fridays, in cooperation with Donbassaero. airBaltic also operates direct flights to the Ukrainian cities of Kiev and Odessa.

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BANKING

Bank of Latvia assets up 25% 

In the first 11 months of this year assets of the Bank of Latvia have grown to 476 million, up by 25 per cent. At the end of November assets of the Bank of Latvia had grown to 1.651 billion lats, New Europe has reported.
In November, the bank's assets rose by 0.9 per cent or 15 million lats, but capital and reserves declined by 900,000 to 88 million lats. Foreign assets of the Bank of Latvia increased by 17 million lats or 1.1 per cent to 1.5 billion lats in the same month.
The Bank's foreign liabilities grew by 16 million lats or 13 per cent to 139 million lats.
The Bank of Latvia domestic assets amounted to 139 million lats at the end of November. The domestic assets have decreased by 1.4 million lats or one per cent as the value of the bank's portfolio of government securities declined by 1.1 million lats and the balance of loans granted to crediting institutions was down 100,000 lats. 
The domestic liabilities decreased by 16.8 million lats or 2.7 per cent to 593 million lats, as deposits made by the government declined by 73 million lats and deposits by crediting institutions grew by 57 million lats. The amount of lats in circulation increased by 17 million lats or 2.1 per cent over the last month reaching 830 million lats as on November 30. 

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CONSTRUCTION

Kalnozols to complete large plant construction in Russia 

Latvian construction group Kalnozols Celtnieciba is completing construction of a metallurgical factory, Mechel, in Chelyabinsk in Russia which commenced in 2003. The local labour workforce carried out construction works, only leading specialists and engineers were Latvian. Kalnozols Stroitelstvo constructed a foundation slab under the steel foundry unit in 2003 and on August 16th 2005, Kalnozols Stroitelstvo worked on four foundations slabs in the Metallurgical factory, costing US$421,000. Kalnozols Stroitelstvo is also building two-car showroom with service areas and warehouses for Mercedes-Benz and Porsche in Russia, New Europe reported.

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