Latvia and the region as a whole should move away from the Russian market - Kazaks

RIGA - Latvia and the region as a whole should move away from the Russian market, Bank of Latvia President Martins Kazaks said in an interview with Latvian Television this morning.

"Why should we seek happiness where we are promised that we will be strangled? Let's go and look for happiness somewhere else. We export to Western markets, where the situation is much more predictable and the long-term profit margins are much higher. So we really should get out of the Russian market," said Kazaks.

He also stressed that the best solution would be to halt trade with Russia for the whole region. "If the flows just go around Latvia, then Russia has support anyway. At this point, the maximum should be done within the whole region so that we can redirect our economies to other regions where growth is much stronger," the Bank of Latvia President said.

Kazaks also compared trade with Russia to sitting on a powder keg. "In this case, trade with Russia is like sitting on a powder keg and waiting for something to happen," he said.

Kazaks pointed out that the Bank of Latvia had already made calculations on how the Latvian economy would be affected by cutting cooperation with Russia when the war broke out, and given that the volume of exports to Russia has not changed significantly in that time, they are still valid, i.e. if ties with Russia were cut, the blow to the Latvian economy would be about 2 percent of gross domestic product (GDP).

He added that this would mean, for example, no growth or a slight recession in the economy this year. "But this is not unbearable. Yes, it is painful, but it is not a question of pain for the whole economy. If there is a rise in unemployment, it will be temporary and small, because the labor market is still quite strong. (...) It is more a question of individual companies, individual sectors," said Kazaks.