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Latvia Economy

    Economy—overview: 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.

    GDP: purchasing power parity—$9.7 billion (1998 est.)

    GDP—real growth rate: 3.6% (1998 est.)

    GDP—per capita: purchasing power parity—$4,100 (1998 est.)

    GDP—composition by sector:
    agriculture: 7%
    industry: 28%
    services: 65% (1997)

    Population below poverty line: NA%

    Household income or consumption by percentage share:
    lowest 10%: 4.3%
    highest 10%: 22.1% (1993)

    Inflation rate (consumer prices): 4.7% (1998 est.)

    Labor force: 1.4 million (1997)

    Labor force—by occupation: industry 41%, agriculture and forestry 16%, services 43% (1990)

    Unemployment rate: 9.2% (1998)

    Budget:
    revenues: $1.33 billion
    expenditures: $1.27 billion, including capital expenditures of $NA (1998 est.)

    Industries: buses, vans, street and railroad cars, synthetic fibers, agricultural machinery, fertilizers, washing machines, radios, electronics, pharmaceuticals, processed foods, textiles; dependent on imports for energy, raw materials, and intermediate products

    Industrial production growth rate: 3% (1998 est.)

    Electricity—production: 3.2 billion kWh (1996)

    Electricity—production by source:
    fossil fuel: 28.12%
    hydro: 71.88%
    nuclear: 0%
    other: 0% (1996)

    Electricity—consumption: 6.18 billion kWh (1996)

    Electricity—exports: 300 million kWh (1996)

    Electricity—imports: 3.28 billion kWh (1996)

    Agriculture—products: grain, sugar beets, potatoes, vegetables; beef, milk, eggs; fish

    Exports: $1.9 billion (f.o.b., 1998)

    Exports—commodities: wood and wood products, machinery and equipment, textiles, foodstuffs

    Exports—partners: Russia 21%, Germany 14%, UK 14%, Sweden 8% (1997)

    Imports: $3.1 billion (f.o.b., 1998)

    Imports—commodities: fuels, machinery and equipment, chemicals

    Imports—partners: Russia 16%, Germany 16%, Finland 10%, Sweden 8% (1997)

    Debt—external: $212 million (1998)

    Economic aid—recipient: $96.2 million (1995)

    Currency: 1 Latvian lat (LVL) = 100 santims

    Exchange rates: lats (LVL) per US$1—0.570 (January 1999), 0.590 (1998), 0.581 (1997), 0.551 (1996), 0.528 (1995), 0.560 (1994)

    Fiscal year: calendar year

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Revised 1-Mar-99
Copyright © 1999 Photius Coutsoukis (all rights reserved)