RIGA – Pointing to a 6.5 GDP increase and low inflation, Latvian Economics Minister Laimonis Strujevics called the country's economic situation "promising" at the July 16 unveiling of the eighth report on the development of the national economy.
Twice a year, in June and December, the Economics Ministry specialists prepare the analysis in which they evaluate the current Latvian economic situation and pace of reforms and forecast development prospects.
Compared to previous reports, this one pays more attention to the questions connected with Latvia's acceptance into the European Union. Strujevics said this is understandable because "all the reforms in the country as well as its further development are undoubtedly tied with integration into Europe, for only joining the EU can guarantee permanent state growth."
The report shows that Latvia has achieved considerable macroeconomic stability proving the right direction of reforms. Consumer price inflation reached its lowest level – seven percent – in 1997. The state debt per GDP decreased to 12.2 percent. Beginning in 1996, growth is noticeable in almost all sectors of the economy. The GDP increased by 6.5 percent in 1997. Foreign investors see Latvia as an attractive country for investment. From 1991 to 1997 foreign direct investment per capita was $517.
Foreign direct investment into Latvia since the beginning of the decade totaled 749.6 million lats($125 million), including a 528.7 million lats investment into the share capital of companies, according to the report.
It cites transportation, comunications, finance and industry as the leading areas of investment. Most foreign money has gone to companies in Riga, Daugavpils, Ventspils and Liepaja, where technology and services are well-developed.
The report also says larger inflow of investment into Latvia is hampered by frequent changes in legislation, slow pace of land reform, insufficient support from municipalities to investors and unsettled border relations with Russia.
Strujevics, however, noted that some economic reforms have not been finished yet. He said there still exist such risk factors as uneven economic growth and an increasing current account deficit, both of which may impede further economic development.
"The pace of further growth will depend on how successfully the reforms will be fulfilled and on the situation outside Latvia, for example, in the EU and Russia," Strujevics said.
Next week the report will be available in English at the Economics Ministry.