Latvian Prime Minister and his Cabinet resigned on Friday, making Iceland and Belgium, following the third in Europe after the economic crisis due to the "off" government. Latvia's current economic situation of what has become the focus of global concern. In this connection, the Bank of Latvia press officer马丁格拉维Cervantes in an interview with reporters bluntly: "Latvia can not be optimistic about the status quo."
Credit rating was cut to "junk"
Including Latvia, Lithuania and Estonia, including the three Baltic countries, has always been regarded as the global financial crisis in the most vulnerable emerging market countries. Began in 2008, Latvia serious economic downturn, last year's third quarter GDP fell 4.6 percent, in the worst performing EU member states. S & P announced on the 24th will be Latvia's credit rating cut to "junk."
Deterioration of economic conditions lead to inflation and rising unemployment, also led to public resentment against the Government. In January this year, about 10,000 people in the capital Riga to launch anti-government demonstrations and subsequently evolve into violent riots, This is the country for more than a decade the most serious street disturbances. Hospitals and schools across the country are facing closure, the local government's budget by 40%, 25% civil service pay cut also. At the same time, Latvia's export-oriented economy almost stalled, unemployment is soaring, the workers accepted a substantial pay cut in order to keep their rice bowls. That same month, the farmers have to shrink the domestic and foreign markets because they are dissatisfied with tractors blocked the streets of the capital, forcing the resignation of Agriculture Minister.
Latvian central bank press officer Cervantes to马丁格拉维Morning News reporter Biao Shi, Latvia joined the EU since 2004 has attracted substantial foreign capital inflow, rapid economic expansion, and the wages are 20% -30% annual rate of sustained growth in 2007 GDP growth rate reached 10%. "However, rapid economic development at the same time, the banks did not have enough savings payment account deficit and the substantial increase in external debt, so things got out of hand." Cervantes格拉维frustration.
Account deficit has been powerless to
Latvia is expected to have experts in next year's deficit will reach 4 percent of GDP. Cervantes格拉维revealed that now Latvia's private sector lending reached LVL 20 billion, accounting for 130 percent of GDP, government loans reached LVL 2,600,000, accounting for about 10 percent of GDP.
In addition to the loopholes in the banking system, Latvia LVL currency devaluation is also facing enormous pressure.格拉维Cervantes said that the Latvian banking system, mainly for foreign banks to dominate, and many loans are in foreign currencies, foreign debt in euros has been 85% loan, if the rat against the euro depreciation will lead to inflation and increase domestic residents debt burden, the Bank of Latvia at this time, therefore not easily liberalize the exchange rate. "Maybe some of the major exporting countries, the depreciation of currencies in favor of export trade, but as a small country like Latvia, the currency devaluation can be fatal."格拉维Cervantes said.
"China's foreign debt and interest repayment of the face, such as account deficit can not do anything about. In order to adjust the internal structure of the country and restore economic development, we have to seek international assistance."格拉维Cervantes said. In December last year, IMF, EU and some European countries as a United Latvia has provided 7.5 billion euros of aid funds. As a condition, Latvia needed to implement the equivalent of 7 percent of GDP the size of the austerity policy, including raising taxes and cut spending.
"We hope that Latvia's economy started to recover from 2010, but the European market is currently very depressed, import demand in a significant decrease, so China's export situation is still deteriorating."格拉维Cervantes said.
■ Central University of Finance and Economics Professor Guo Tian Yong
Development: or to rely on domestic demand
Lower labor costs, Eastern Europe are the advantages of these emerging countries, so the future with the warming of the global economy, or have to stand up development opportunities.
The crisis in Eastern Europe to China has also brought some enlightenment, emerging countries to develop the economy, they must depend on stimulating domestic demand growth, open up its domestic market demand, should not one-sided development of export-oriented economy, the hope is only to be pinned on the outside.
■ vice president of Shanghai Institute of Finance贺瑛
Emergency: for international assistance
Generally speaking, a country you want to Spend the economic crisis has two options: shock therapy or gradual reform. In accordance with the current situation in Eastern Europe, should not shock therapy, and progressive therapy can not solve the problem. Therefore, to seek international assistance, by external forces push to get rid of the quagmire, is now the most effective way to rescue the market, one of the IMF or the use of force in the EU are feasible.
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