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Latvia
 

Country
GDP per Capita: $2,700 GDP (USD Billions): 6.4 GDP Growth Rate: 0.1% Foreign Direct Investment: 216 $US Millions External Debt as a % of GDP: 25% Inflation (CPI): 2.6% Currency: 1 Latvian lat (LVL) = 100 santims USD Conversion Rate: 1 USD = 0.6100 LVL Population (Millions): 2.4 Population Growth Rate: -1.3% Labor Force (Millions): 1.4 % Growth in Labor Force:-1.3% Unemployment: 9.2% Language: Lettish, Lithuanian, Russian Major Industries: buses, vans, street and railroad cars, synthetic fibers, agricultural machinery Political System: parliamentary democracy Economic System: free market Literacy Rate: 100% Prime Minister Andris Skele; President Vaira Vike-Freiberga

Latvia

Developments in 1998 include an invitation to join the World Trade Organization (the first Baltic country invited), GDP growth of 3.6% (down from 6% in 1997), and reduced inflation at 4.7% (from 8.4% in 1997). The drop in GDP growth is largely attributable to the impact of Russia's financial crisis and reduced investment in emerging markets following the Asian financial troubles. Unofficial sanctions that Russia imposed in the spring initially hit Latvia's exporters. Russia is among Latvia's top three trade partners. but also prompted them to seek alternative markets. Latvia continued its strict fiscal and monetary policy, including its second balanced budget and had a 1.8% budget surplus. Its draft 1999 budget is based on conservative projections of 2% to 4% GDP growth and 4.5% inflation. Unemployment climbed to 9.2% in 1998, a considerable increase over the 6.7% rate in 1997. Latvia continued to have a high current account deficit, estimated at about 9%. Privatization of large state utilities. especially the energy sector. was postponed and is unlikely to resume before late 1999. EU accession remains Latvia's top priority, and Latvia expects to be invited to start EU accession talks by the end of 1999. Continued troubles in the Russian and East Asian economies probably will hold growth to around 2.5% in 1999. SOURCE: CIA FACTBOOK

Comment:

A Standard and Poor's credit rating measuring economic stability and capacity to absorb external adverse shocks (June 99) placed Latvia fourth among all Central and Eastern European countries. With few natural resources - Latvia looks to import all of its natural gas and oil needs and half of its electricity needs. 96% of all state enterprises have been privatised and the country has enjoyed one of the lowest inflation rates in the region over the past five years. To improve the business climate, the Government has recently reduced property tax and plans to simplify customs and licensing procedures and promote land market development. Among Latvia's main importing goods are: machinery and mechanical appliances, products of chemical and allied industries, and transport vehicles.