RIGA - The Latvian economy has not yet reached its lowest point, despite some evidence of emerging green shoots, believes Latvian Employers' Confederation President Vitalijs Gavrilovs, reports news agency LETA. Commenting on the Association of Hotels and Restaurants of Latvia President Janis Naglis' statement at the 15th Baltic Financial Forum, that the Latvian economy has already hit bottom, Gavrilovs said that the economic downturn continues and the lowest point is still ahead.
The government must do what it promised to the international lenders to avoid damaging the reputation of Latvia internationally, he says. "What the government can do now is to convince the international lenders that it can increase budget revenue through [boosting] GDP, not by raising taxes," said Gavrilovs, adding that the government has still not begun the structural reforms, based on certain goals to promote economic development.
Naglis said that Latvia's competitiveness has decreased in several sectors. "The government must discuss all of the planned changes with the respective business associations to have a well-weighed policy, so various national economy sectors develop."
Gavrilovs mentioned that the development of exports requires exporters to consider new markets, such as Turkey, India and other Asian countries.
Exports could grow by 31.2 percent between 2011 and 2015, estimates an Economy Ministry forecast. The ministry's report says that between 2008 and 2010 Latvia's GDP will shrink by 23 percent, essentially giving back two thirds of the growth that was achieved in 2004-2007. Unlike in previous years, further reliance on exports will be the principal stimulus for growth.
In looking at specific sectors, the ministry, in the risky practice of long term forecasting, says that from 2011-2015, the wood industry and food production will contribute greatly to GDP growth; chemical engineering, production of electric and optical devices, machine manufacturing and metal processing are expected to grow. The two latter groups will account for 29 percent of the total increase in volume of manufacturing industry exports, whereas the wood industry will account for 26 percent.
Latvia should focus on the sectors that allow the country to use its natural advantages and traditional exports markets.