IMF positive on Latvia’s outlook

RIGA - Latvia’s gross domestic product will expand at least 4 percent as the economy weathers the effect of Europe’s debt crisis, said Mark Griffiths, the International Monetary Fund’s mission chief for the Baltic country, reports Bloomberg. “The economic situation is getting better, GDP could grow 4 percent or even higher this year,” said Griffiths, at a press conference in Riga on Oct. 6.  “The difficulties in Europe will effect Latvia, but to a less extent” than previously in 2008, he said.

Latvia’s economy grew 5.6 percent, year-on-year, in the second quarter, the quickest pace in 3 1/2 years, after contracting by almost a quarter since 2008, following the end of a credit-fueled real-estate bubble. The government was forced to turn to a group led by the European Commission and the IMF for a 7.5 billion euro loan package in 2008 after the second-biggest bank, Parex, needed a state rescue.

The commission and IMF are in Latvia as part of a pre-review mission to look at the budget and economic estimates, the effect of a capital increase in the airline airBaltic and plans to split state-owned Hipoteku Banka, Griffiths said.
Latvia’s mission with the EU and IMF ends in December. The IMF forecast the country’s GDP growth at 4 percent this year and 3 percent next year in its European outlook released on Oct. 5.