Analytics, Crisis, Direct Speech, Economics, EU – Baltic States, Financial Services, Interview, Latvia

Mark Weisbrot.

The Latvian economy had shrunk 25% before it began recovering – many people lost their jobs. That the economy finally started to grow, is not an achievement at all, given that the fall was the most devastating in the entire world. Latvia has lost one-fourth of its economy, of which only a fraction has been recovered. People have been lost due to emigration, the employment is way below the pre-crisis indices. This is a situation that cannot be compared with anything else – no country did worse than Latvia, says Weisbrot. This cannot be considered a success story, says Weisbrot, adding that he is surprised why Latvia is so often called one, reports LETA.

Weisbrot is ironical about the book by Prime Minister Valdis Dombrovskis (Unity) and economist Anders Aslund, which informs how Latvia exited the crisis.

Weisbrot says that the authors admit in the book that the Latvian economy has been slashed the most in the world, but then they go on as if this has no importance – they completely exclude it from their calculations.

Furthermore, the current economic recovery is not that rosy either, because that is not a recovery that one would normally expect after such a sharp decrease. This is not an Argentine-type recovery, where the economy after devaluation was shrinking for one quarter, and then a growth of 8-10% a year continued for the next nine years, notes Weisbrot.

He emphasizes that no other nation has been through what Latvia has.

Weisbrot believes that Latvia is an example of what policy should not be pursued in such a situation, because the cost is extraordinary.

If a 25% fall in the economy is ignored, one might see something positive because, generally speaking, there is always a bottom to hit, below which an economy cannot fall, stresses Weisbrot. Europe must not allow any of the countries in crisis to go through what Latvia experienced. First of all, these nations will not allow this to happen. They have not seen a half of what the people saw in Latvia, and they have already taken to the streets. Besides, that is cheating – to start making calculations only after the economy has begun to grow, says Wesibrot.