Sanctions on Russia will have painful impact on Latvia in short term - Kazaks

RIGA - Sanctions imposed on Russian over its invasion of Ukraine will have an impact on the Latvian economy in the short term, the Bank of Latvia Governor Martins Kazaks said in an interview with Latvian Television on Tuesday.

"These sanctions will certainly have an impact on Latvia in the short term, but the war is incomparably more painful," said Kazaks, adding that at the moment it was difficult to say how painful this impact would be.

Among other things, Kazaks mentioned that inflation in Latvia would clearly be higher for a longer period of time than initially expected due to rising energy prices and also due to higher food prices, as Russia and Ukraine are important grain producers on the global market.

"As a result, inflation is likely to remain high for longer than initially expected, and the restrictions and the rising prices will dampen economic growth. It is too early to say what the figures will be," Kazaks said.

At the same time, he emphasized that sanctions were only effective if they were painful for both parties. "There are no sanctions that only hurt one party," Kazaks added.

The current sanctions against Russia have been very quick, they are very extensive and very painful economically, and the sanctions will be further extended, said Kazaks.

"The final list of sanctions is currently unknown. The only thing we know is that they will become even more extensive and hurting, with the aim of making this military attack as difficult to finance and economically painful as possible for Russia, in order to change its policy as soon as possible," said Kazaks.

He went on to say that, even though Latvian companies would suffer from the sanctions, the sanctions would never be as painful as a war. "So it is better to take a path of very painful but very extensive sanctions in order to avoid war."

"As Ukrainians defend their freedom, they are also defending us. Therefore we must unequivocally support the Ukrainians," said the Bank of Latvia governor.