Non-residents impact Latvian economy

  • 2006-09-20
  • From wire reports
RIGA - Deposits from non-residents into Latvian banks significantly affect the nation's GDP, a recent study sponsored by the Latvian-American Financial Forum and carried out by KPMG Baltics showed.

The impact of non-resident activity was calculated at 192 million lats, or 2.2 percent of Latvia's 2005 GDP. If foreign deposits that were made as an alternative and cheaper source of financial transactions are included, the figure jumps to 305 million lats or 3.4 percent of GDP for 2005.

Board chairman of the Latvian-American Financial Forum, Aivis Ronis, said that the survey demonstrates the positive contribution of financial services to Latvia's export growth.
The survey showed that the deposits made up 15 percent of the Baltic state's net imports and exports of services, or 4.6 percent of their current account deficit.

Foreign deposits in Latvia at the end of last year accounted for 47 percent of all deposits in the Latvian banking sector, down 7 percentage points from the end of 2004. Non-residents' deposits in Lithuanian banks rose by 31 percent and by 16 percent in Estonian banks in the same period.
Currently there are 24 banks operating in Latvia, including two branches of foreign owned banks.