Latvia Economy—A Transitory Look

Officially Latvia is known as the Republic of Latvia. It is one of the three Baltic States, and located in the Baltic region of Northern Europe. Riga enjoys the status of capital city whereas Latvian is the official language. In the year 2013, the country was listed 44th on the Human Development Index (HDI), and also as one of the high income countries worldwide. It’s only on January 1, 2014 that the country replaced its currency with ‘Euro’ from Latvian ‘Lats’.

This Baltic country regained its independence from the Soviet Union in early 1991. This beautiful democratic country is a relatively low-lying country with heavy forests that provide timber for construction purpose and to paper industries. It also produces several kinds of goods, like; for instance, machine tools & textiles. The country’s environment is rich in wildlife and attracts tourists from all over the Europe.

For decades, Latvia was an agricultural country, with forestry, fishing, and seafaring as important factors towards economic growth. The country has raised its status to the European Union’s fastest-growing economy.
Latvia has a small yet open economy and many trade experts believe that, in terms of economic growth, this Baltic country will maintain its position among the top-performing EU nations. The country’s exports sector contribute about a third of the GDP.

Thanks to its perfect geographical location, transit services are well developed, along with agriculture, food products, timber and wood-processing and manufacturing of electronics industries and machinery. During the last decade, the country has experienced many ups and downs. However in the mid 2000, the country experienced the growth rate of more than 10% annually.

In the late 2008 and early 2009, the country faced the collapse of the Latvian GDP. During the first three months of 2009, the economy fell to 18%; the biggest ever fall in the European Union. However, by 2010, the economy experts noticed the signs of economic stabilization in the national economy, and by 2012, the managing director of IMF described it as the most successful country.

The positive economic growth can be credited to the country’s European Monetary Union (EMU) membership. Economic predictions by the Bank of Latvia indicate that the practice of the euro would lead to an increase in Latvian exports to the various EURO blocs that include all EU member states, except Sweden and Britain.

Towards the growing and booming economy, the contribution of privatization is considerably high across the country. Almost 90% of the state-owned small and medium firms have been privatized leaving behind only a very small percentage of politically sensitive large state companies. In the coming years, many economic experts expect that the national economy will only grow to a large extent making it a major hub in whole of Europe to trade with.

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