Аналитика, Латвия, Экономика

Andis Riekstins.

"Making a realistic assessment of the situation, observing global tendencies: increasing prices of oil and other resources, I would say, it will be a "hard landing". There was steady development for a long time, but now the economy is falling down and improvement is not expected soon. I believe that the lowest point of recession has still not been reached. Using financial terminology to explain it, there are V-type and U-type crises. In my opinion this is going to be a U-type crisis, the economy will stay at the bottom for a while and then go up again," the expert anticipates.

He avows that economic problems could continue for another two to five years.

"Taking in consideration the structure of Latvia's Gross Domestic Product, it can be concluded that we were actually subsisting on bank loans and European Union funding. These money flows have both now grown scare or have stopped. Export, which creates the added value and brings income to Latvia, is relatively small and insignificant, therefore I can see no reasons for Latvia's GDP to start growing," Riekstins explains.

He also underlines that Latvia's tax policy is "unattractive". The government should lift the revenue tax on the reinvested profit, as done in Estonia. It should also stop advance payments on income tax, which is basically state crediting. EU funding should be made more accessible, the financial expert points out.