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Opinion: there are known structural risks for Latvia’s economy

Lolita Čigāne/flickr.com/Saeima.
Latvian Saeima’s European Affairs Committee has voiced support for the country’s Stability Programme 2018-2021. The goal of this action plan is ensuring budget discipline, monitoring and coordinating budget policy in Eurozone and European Union.

Members of the committee welcome the planned economy-stimulating measures. At the same time, deputies also mention structural risks, urging to remain cautious, as reported by Saeima’s press-service.
 

«There are known structural risks for Latvia’s economy. This includes a low investment level and gradual reduction of the number of residents of working age, which is something representatives from Finance Ministry mentioned during today’s meeting. It is necessary to perform measures to stimulate the economy. Nevertheless, we should be careful. The aforementioned risks could potentially create serious economic problems, and we may need our financial reserves to mitigate possible consequences,» as chairperson of Saeima’s European Affairs Committee Lolita Čigāne said after the meeting.
 

She said this matter is especially important in regards to next year’s budget, which will be approved by 13th Saeima’s deputies. It is highly important to consider structural risks when discussing next year’s budget.
 

Low investment level in the national economy is mentioned as a negative risk for economic growth in Latvia’s stability programme. This is especially true for processing industry. The continued reduction of residents of working age is considered a lasting risk. There is also the risk of imbalance between rise of productivity and wages, which only serves to reduce Latvia’s competitiveness. Other risks include geopolitical uncertainty and problems in Latvia’s financial sector.
 

Among the more positive trends are efforts to clean up the country’s financial sector and increased activity in crediting services, as well as more rapid inflow of investments. The positive effect the recent tax reform has had on development of Latvia’s economy, as well as more rapid economic growth in the world and Latvia’s main trade partner states are also positive factors.

BNN

12-04-2018
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