How does the economy of Latvia


2018-03-17 22:30:37




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After the collapse of the Soviet Union and the major reforms the economy of Latvia for some time, quickly rose in all indicators. In the two thousandth years - about five to seven percent per year until 2008, when the crisis began. In 1990, the economy of Latvia is occupied by GDP fortieth place in the world, and by the end of 2007 was on the third place among post-Soviet countries. Ahead of her only Armenia and Azerbaijan.

economy of Latvia


In 2006, per capita GDP was 12.6 % in 2007 and 10.3 %. In 1992 was introduced the currency - the Latvian ruble, and since 1993 it has gradually replaced the Latvian lat. Was held restitution and privatization, the share of industry in the economy of Latvia decreased to 12 % (in 1990 the proportion was 30 %). Already in 2008, namely Latvia became the leader of the Union for the number of poor, twenty - six percent of the population lived below the poverty line. Finally in 2009, the GDP in the economy of Latvia became the worst indicator for GDP growth in the world.

General development of the Baltic States from 1992 to 2007 was called a phenomenal success in the transition from transformation to growth and establishment of modern market institutions. Now, however, Western scholars from the economic sector tend to see this growth only residual actions of the Soviet heritage, then and in the Baltic States was particularly well developed industry and infrastructure, as well as volume accumulated human capital. The economies of Estonia, Latvia, Lithuania rose only due to the remaining resources and only in the first few years. In 2010, Latvia's GDP has continued to fall, but in 2011 has risen to five and a half percent. Coming from the USSR, Latvia joined the world trade organization, and in 2004 joined the European Union. To use Euro here began only in 2014.


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how does the economy of Latvia

External trade

The Economy of Latvia after joining the EU afloat through exports. The main products are metal bars and iron, which is slightly more than eight percent of the total production, followed by six percent of the equipment and electrical machines, four percent - lumber, three and a half textiles and knitwear, products, pharmaceuticals - three percent, slightly less is spent on round timber and two and a half per cent on wood products. Exported these products to neighboring Russia, Lithuania and Estonia, as well as a bit in Germany, Sweden and Poland. But the imports come into Latvia from a much larger number of countries.

In 2015, the external debt of the Ministry of Economics of Latvia stood at 8,569 million euros. In previous years it has fluctuated very slightly. A little earlier - in 2000 - share of Latvian total external debt amounted to more than sixty percent of its GDP, and in 2007 had jumped to one hundred thirty percent of the country's GDP. In 2009, debt accounted for more than one hundred and eighty percent. What does this mean? How does the economy of Latvia? Primarily as a bankrupt.

the structure of the economy of Latvia


The Priority in the sectoral structure of Latvia's economy enjoys the services sector - almost seventy percent of GDP is obtained from there. Five percent yield forestry and agriculture, twenty-six percent of the industry. Before 2003 (i.e. before joining the EU) industrial production in Latvia grew slightly - by around five percent a year, and despite the fact that for development, for example, energy resources of the country is extremely small (of the Riga CHP plant No. 1 uses local peat, the rest of the industry needs imported raw materials).

Experts estimate the oil reserves on the shelf of the Baltic sea in thirty million tons, not too many for a successful production. The river is also because of their flat character does not have much hydro potential. Latvia produces only 3.3 billion kilowatt-hours of electricity, and it consumes 5.2 billion. HPP produces 67 % of it, the rest of the thermal stations which have to buy fuel. Electricity is mainly imported from Russia and some from Estonia and Lithuania.

Minister of economy of Latvia

Wood and textiles

Virtually all of the wood is exported. The main enterprises of the Ministry of economy of Latvia considers plywood producers in Kuldiga, Daugavpils, Liepaja, Riga, and paper makers in Riga and Jurmala. Many of the crafts of woodworking, small businesses are everywhere in cities and in rural areas. They serve mainly tourists, making for them a variety of Souvenirs. But the textile industry is much more developed. It is supported by about sixty large and well-known companies, among which some have up to thirty million dollars annual turnover. Their products can compete quite easily with those in Sweden, Germany and England. It should be noted that almost all goods from Latvia are sold abroad under their own brands, and companies-partners.

Focuses on the manufacture of textiles for export only, leaving in Latvia less than seven percent of production. For example, in 2002, the team sold a variety of textiles for three hundred and fifty million dollars. As an EU member, Latvia is obliged to introduce from three to seventeen percent of import duties on all imports from third countries, as well as for raw materials for the textile industry. And raw materials are purchased almost entirely, including semi-finished products in Uzbekistan, Belarus, Ukraine and Russia. In the end, the finished products are considerably more expensive: and fabric, and clothing, which produces Latvia. The economy is significantly affected. Competitiveness is falling rapidly, and even of this industry, which has always been successful, benefits the country is less and less.

the Ministry of economy of Latvia


This industry during the Soviet era there is always flourished. The Minister of economy of Latvia - a well-known chess grandmaster and politician Dana Reizniece-Ozola, who occupied a Ministerial seat in 2016, believes that the current stagnation in the food sector we need to overcome. Indeed, the only thriving plant in Latvia, which produces the famous "Riga black balsam". This alcohol and today has a fairly stable market, and the company is in the top three largest taxpayers.

Everything else is much worse. Out of fifty-six dairy processing plants, only eight are from a veterinary officer certificates of compliance with European products, which give the right to import dairy products to Europe. The fish catch and processing of it has decreased three times since European quality requires a fundamental modernization and reconstruction of almost all businesses. Is that small producers are able to give an exclusive product.


Reform and privatization of land has led to a measurable decrease in core acreage. But restitution of many land plots were returned to the people who have no interest in processing them or not to have this any opportunities. Arable land had previously been twenty seven percent of the structure of the land Fund, and now all declined. Meadows and pastures previously occupied thirteen percent, and the forest - about forty. Now half reduced the production of grains and potatoes decreased by twenty percent the number of cattle, respectively, and milk and meat became less, almost died the industries that kept the Foundation of agriculture of Latvia.

A Farming even domestic needs to meet today. Subsistence farming is unable to feed the people, farmers lack the financial resources, they are very poorly secured fertilizers and agricultural machinery, and experience in agribusiness yet it is small. And most importantly, in Europe, all that they produce, almost uncompetitive.

economy of Estonia Latvia Lithuania

Services: tourism

Latvia is rich in historical monuments. On its territory - about a hundred of interesting castles and palaces. The resort area of the strip of the Gulf of Riga is famous for its mineral waters (sulphide) and therapeutic muds. However, it is not all right. Earlier on tourists and vacationers of Latvia did not rebound. And now there is the conclusion of European experts: as a recreational area Riga coast used to be, because the necessary full-scale remediation. And because today is such an attractive in the past and extremely busy campgrounds, resorts, beaches empty and mostly idle.

The recreational infrastructure in Latvia was established in Soviet times in the middle of the last century, and therefore it is clear that without the contribution of many efforts and spending money, this system will continue to degrade. This is a striking figure: tourism in Latvia, a country that was created for tourists, only about 2 percent of GDP. When the Soviet Union seaside has been visited annually by nearly seven hundred thousand tourists, now there are exactly twenty times less. Come to rest, people mainly from Belarus and Russia and very few from Germany and Finland. Europe promises to help Latvia to revive the sector, and the Latvian governments...

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Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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