Latvia - Future trends

The outlook for Latvia in the near and far future is bright. The continued stabilization of its currency, the increase in democratic activities and transparent economic activities, the growing degree of privatization, the liberalized trade policy, and the increasing skills of its workers all mean that unemployment will decline and foreign investment is likely to continue. The current downside to this situation is that poor wages prevent the average citizen from equal participation in the emerging economic system. Also, with minimal capital available to Latvian citizens, much of the country's developing assets will be foreign owned, a condition looked upon by many Latvians as unfavorable. With Latvia's accession into the EU, the situation is likely to improve even more as capital and labor will be able to move across the borders of a united Europe.

In its efforts to enter the EU, Latvia has decreased the distance between itself and the leading Eastern European countries. But Latvian officials are disappointed that a recent progress report on EU accession of Eastern European countries puts them in a lagging category. The report states that Latvia has a "functioning market" that should be able, in the medium term, to cope with the competitive pressures of the EU market. The main tasks for Latvia will be continued privatization and fiscal discipline.

The Nordic States banking group, Nordea, predicts that Latvia will experience significant growth in the near future. The country's pulp mill industry is cited as one of the key factors for this predicted growth. Nordea predicted growth in the GDP in the coming years are as follows: 5.5 percent for 2001, 6 percent for 2002, and 5.3 percent for 2003. One negative aspect mentioned in the report was the possibility of current account deficit expansion if the privatization process should slow. This has been a perceived risk because recent political support for the left-oriented Social Democrats that are threatening the incumbent coalition.

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