EU sanctions on Belarus will not have too great an impact on Latvian economy - Swedbank economist

  • 2021-06-22
  • LETA/TBT Staff

RIGA - European Union sanctions against Belarus will not have too great an impact on the Latvian economy, as Swedbank's senior economist Agnese Buceniece told LETA.

"In general, the impact on the Latvian economy from the EU sanctions does not seem too great. Belarus is not a significant trade partner for Latvia. Both exports and imports account for only a few percent of foreign trade. Some sectors and companies may experience greater inconvenience or even losses, especially if the flow of goods and services between the two countries is significantly affected," said Buceniece.

At the same time, she pointed out that any restriction of economic cooperation between Latvia and Belarus, whether due to the EU sanctions or possible response sanctions by Belarus, would be detrimental to both economies.

According to Buceniece, Belarus is more important to, for instance, some textile industries that export their products to this country. A significant part of the export of certain medical devices and accessories goes directly to Belarus, but it is possible that part of these goods are re-exported and are not produced in Latvia. In turn, for the Latvian wood processing industry, Belarus is a source of raw materials. Transit is another sector where cooperation with Belarus is closer, with Belarusian freight accounting for more than a tenth of export freight and more than a quarter of imported freight in Latvia.

At the same time, Latvijas Dzelzcels (LDz) railroad company's representative Ieva Bethere told LETA that it was too early to talk about what impact the EU sanctions on Belarus would have on LDz Group.

LDz has been actively working on diversification of its target markets and freight types for several years, but, undeniably, Belarus is a strategically important partner and a target market for LDz.

"Last year, the volume of cargo transported to and from Belarus accounted for more than 30 percent of our total freight turnover. We are closely following information about Belarus, as it may have an impact on the volumes of cargo transported. As for how much the sanctions could hurt the company, it is too early to judge," said Bethere.

As reported, foreign ministers of the European Union on Monday agreed sanctions on key sectors of the Belarus economy as the bloc ratchets up pressure on President Alexander Lukashenko after the forced landing of an airliner.

Ministers meeting in Luxembourg backed broad-ranging measures targeting major revenue sources for the Belarusian regime: potash fertilizer exports, the tobacco industry, petroleum and petrochemical products, and the financial sector, diplomats told AFP.