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International Internet Magazine. Baltic States news & analytics Thursday, 22.02.2024, 05:12

Analysts: Latvian election results pleases investors

Nina Kolyako, BC, Riga, 05.10.2010.Print version
Latvia's election last weekend showed voters can forgive – perhaps even reward – the toughest austerity measures if they are seen as necessary and voters do not blame those in power for the economic crisis, according to analysts interviewed by the Reuters news agency. Prime Minister Valdis Dombrovskis (New Era) and his coalition partners – formerly a minority government that pushed through Europe's toughest spending cuts – won a majority, and this fact made investors satisfied.

That pleased investors, who had worried a more inconclusive result might stymie reforms and endanger an International Monetary Fund/European Union bailout, informs LETA/Reuters.


"On the face of it, it is remarkable that the coalition has received such strong backing given the austerity that has being inflicted," said Neil Shearing, senior emerging markets economist at Capital Economics.


But analysts caution against reading too much into the result, citing factors from its tough history – seen making Latvians more resilient – to local electoral issues.


Crucially, Dombrovskis – who only became prime minister in March 2009 after riots linked to the crisis forced out the previous government – was still seen as a "fresh face" and not to blame for the initial crisis.


"The positive performance of Dombrovskis and the Unity coalition was due to the unique conditions of the Latvian political system and because... (they were) a new political force on the scene during the economic downturn," said independent political analyst Agnia Baranauskaite.


In contrast, she predicted elections in neighboring Estonia and Lithuania in 2011 and 2012 would likely punish incumbent parties that implemented austerity measures unless their economies improved considerably.

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