RIGA - International credit rating agency Standard & Poor’s raised long- and short-term local and foreign currency sovereign credit ratings on Latvia from BBB-/A-3 to BBB/A-2, and Latvia’s transfer and convertibility (T&C) assessment from A- to A, reports LETA. Finance Minister Andris Vilks points out that this assessment is very important for Latvia’s economy and is a substantial signal to foreign investors.
“I am pleased with this decision, since the credit ratings on most EU member states are currently, on the contrary, being reduced. Latvia is capable of implementing a consistent policy, bringing order to public finances, reducing an excessive budget deficit and ensuring a stable and predictable tax system,” says the minister.
Vilks reiterated that Latvia’s macroeconomic and fiscal indicators have been exceeding the projected figures for several years now.
Growth remains strong
In the third quarter of this year, Latvia has continued to see balanced economic growth. Thus, the economic growth figure for 2012 will be better than previously predicted, and could be from 4.5 to 5 percent, says Vilks. “Latvia’s economy is continuing to show resistance to the negative trends in Southern Europe. Contrary to previous forecasts, Latvia has seen growth increase when compared to the previous quarter. Meanwhile, compared to the third quarter of last year, Latvia has registered 5.3 percent growth, which most likely will once again be the largest growth in the EU,” Vilks emphasized.
The Finance Minister says that growth can be seen in various sectors - manufacturing and export, retail trade, as well as construction. Growth in these areas has also led to an increase in consumer spending. Furthermore, the excellent harvest this year has also helped facilitate economic growth in Latvia, which has also left a positive mark on the transport sector.
He added that the largest risks to Latvia’s economic development are related to events taking place outside of Latvia.
The growth in industry and in trade of 7 percent as well as 8 percent growth in construction had a significant positive effect on the GDP. During the third quarter, increases were recorded in almost all areas of the services sector, and budget revenue from taxes on products increased 7 percent.
Compared to the second quarter of 2012, GDP increased 1.7 percent in the third quarter, according to seasonally adjusted data.
Growth means jobs
Prime Minister Valdis Dombrovskis believes that GDP growth not only means increases in manufacturing and exports, but also the creation of new jobs and a gradual return to growth in income. The prime minister’s press secretary Martins Panke said that he believes this is felt by Latvian residents more and more each quarter.
Commenting on the third quarter’s GDP growth figures, Dombrovskis emphasizes that Latvia’s growth rate exceeds all other EU countries, which allows the country to move closer towards the EU’s prosperity level.
“In 2011, Latvia’s GDP level was 58 percent of the EU’s average. I expect Latvia’s GDP level will exceed 60 percent of the EU’s average this year,” the prime minister predicted.