Report: Country Report Latvia December 2009 (EIU00800) from ReportBuyer.com

The five-party, centre-right government is led by Valdis Dombrovskis. The government is unlikely to survive until the election that is due in October 2010, and there is still some chance of the election being called early.
The recession has slashed tax revenue, but recent large spending cuts are now having an effect, and the budget deficit is forecast to fall from an estimated 8.6% of GDP in 2009 to 7.8% of GDP in 2010 and to 5.3% in 2011.
The Economist Intelligence Unit estimates that real GDP fell by 16.9% in 2009 and forecasts a fall of 2.9% in 2010, as private consumption and investment decline. Recovery will begin in mid-2010, with GDP rising by 3% in 2011.
Average inflation is estimated at 3.6% in 2009, but consumer prices are forecast to decline by more than 3% in 2010, as the recession generates deflationary pressures. Prices will be broadly stable in 2011.
The authorities are committed to keeping the lat within its current narrow band against the euro. However, Latvia's external position remains weak, and there is still a significant risk that the currency will eventually be devalued.
We forecast that the current account, which recorded a deficit of 13.2% of GDP in 2008, will post large surpluses in 2009-10 as weak domestic demand limits imports. The surplus will gradually fall as the economy recovers.

The government managed to push the 2010 budget through parliament at the end of November, winning the crucial parliamentary vote with a surprisingly comfortable majority.
There are already signs that political instability will increase, following the return of Andris Skele to the leadership of the People's Party, one of the main parties making up the governing coalition.
Emergency spending cuts undertaken in 2009 are now having an impact on the budget deficit, and the government is confident that it will meet the target for a deficit of 10% of GDP.
An IMF team arrived in the capital, Riga, at the beginning of December to review progress with the country's loan agreement. The IMF appears broadly content with the 2010 budget, but may press for some detailed changes.
The labour market continued to weaken in the third quarter. The unemployment rate rose to 18.4% of the labour force and nominal wages dropped sharply.
In the third quarter the current account recorded another large surplus and the outflow of private capital was lower than in the first half of the year.

This report covers the following industry codes:
SIC Code: 70;65
NAICS Code: 72;53

Delivery Details

PDF:Immediate delivery