"Eugene Holman" <holman@[EMAIL PROTECTED]
> wrote in message
news:holman-1305081146570001@[EMAIL PROTECTED]
> In article <holman-1305080854350001@[EMAIL PROTECTED]
>,
> holman@[EMAIL PROTECTED]
(Eugene Holman) wrote:
>
>> In article <2OudnZBD9ceJnLTVnZ2dnUVZ_ovinZ2d@[EMAIL PROTECTED]
>, Vladimir
>> Makarenko <vmakard@[EMAIL PROTECTED]
> wrote:
>>
>> > captain. wrote:
>> > > why?
>> > >
>> >
>> > Price parity - it is not a real inflation, it is prices in Latvia go
to
>> > the level of average prices of EU. No escape. Real inflation there is
>> > much lower.
>>
>> I agree. The Baltic countries would like to introduce the euro, but
they
>> would also like their price, wage, and productivity levels to be within
>> the range of what one would expect of other countries with similar
>> economies in the region before locking themselves into it. Estonia,
with
>> a
>> wage and price level approximately that of ****tugal, the poorest "old
EU"
>> economy, has arguable already gotten its foot into the door. Latvia and
>> Lithuania still have a way to go.
>>
>> > Such a phenomena is intrinsic to economies which catching up.
>> > If you drive carefully everything is going to be fine.
>>
>> It is bitter medicine, but it could only happen with a steady torrent
of
>> money pouring in from alsewhere as investments, which demonstrates
>> confidence in the future. You can't have Western European wage and
price
>> levels without a Western European level of productivity and a
>> sophisticated, diversified economy. These investments are creating the
>> infrastruture necessary for state-of-the art economies to evolve and
>> function in the three Baltic countries. Although Estonia has come
>> furthest
>> in this regard, Latvia, with Riga, the biggest and potentially richest
>> city in the Baltics and the most natural center for trade between the
EU
>> and Russia, is the magnet that attracts the most foreign investment
>> money,
>> hence the seemingly onerous inflation.
>
> Here are more details.
>
> Source:http://www.guardian.co.uk/business/feedarticle/7508586
>
>
> <quote>
>
> Latvian Q1 GDP growth tumbles to 3.6 pct yr/yr
>
> By Patrick Lannin and Jorgen Johansson
>
> RIGA, May 9 (Reuters) - Latvian year-on-year economic growth slid to 3.6
> percent in the first quarter of 2008 from 8 percent in the previous
three
> months, showing a further cooling of the once booming Baltic region.
>
> The first quarter data, a flash estimate from the statistics office, was
> in line with pessimistic forecasts for the economy by the International
> Monetary Fund (IMF), which sees growth at 3.6 percent this year and down
> to 0.5 percent in 2009.
>
> The figures showed Latvia faces a bumpy ride ahead as it strives to get
> its economy in shape to adopt the euro, which it aims to do in 2012 or
> 2013, as inflation is still rising though growth is slowing.
>
> The Latvian central bank, forecasting growth this year and next of about
5
> percent, said there were still positive factors at work in the economy,
> though analysts were disappointed.
>
> "This is a very negative surprise. I could not see how we could get such
a
> low figure. The economy is slowing down faster than expected," said SEB
> Unibanka chief analyst Andris Vilks.
>
> "I don't think we are heading into a crisis. The slowdown in consumption
> is more of a psychological reaction to very high prices and inflation.
It
> is still possible to increase consumption here," Vilks added.
>
> The first quarter data was below expectations for growth of 5.2 percent,
> the median forecast in a Reuters survey.
>
> The central bank said ex****ts were becoming the main growth engine after
> sharp falls in domestic demand and it was im****tant for the government
to
> pursue efforts to sup****t ex****ters.
>
> "Looking at further growth prospects this year, it is im****tant to note
> that despite the ebbs of the economic cycle, several positive factors
> which will continue to stimulate growth have been maintained," said
> spokesman Martins Gravitis.
>
> In emailed comments, he said such factors included continued strong
> foreign investment, remittances from Latvians working abroad, European
> Union funds and ex****ts, particularly to countries of the former Soviet
> Union.
>
>
>
> REGIONAL SLOWDOWN
>
> The Latvian government has forecast growth for 2008 and 2009 at about
5.5
> percent, down from 10.2 percent in 2007.
>
> Latvia's economy grew 11.9 percent in 2006 and 10.6 percent in 2005,
> boosted by rapidly rising property prices, construction, a private
> consumer boom, strongly rising bank lending and expanding services.
>
> But since the middle of last year property prices have been stagnant or
> falling, and bank lending has dwindled, partly due to measures taken by
> the government to rein in inflation.
>
> Inflation has anyway soared on the back of energy price rises and wage
> gains. In March, the annual rate of inflation was 16.8 percent.
>
> The Latvian gross domestic product (GDP) data came after figures for
> Lithuania showed a slowdown in growth to 6.4 percent in the first
quarter
> from 8 percent in the previous three months.
>
> In Estonia, the central bank forecasts growth this year of just 2.2
> percent, down from 7.1 percent in 2007.
>
> All three Baltic states had to drop plans for a quick entry to the euro
> zone. Lithuania is now eyeing 2010 and Estonia 2011. (Re****ting by
Patrick
> Lannin; editing by Gerrard Raven)
>
> </quote>
>
> Regards,
> Eugene Holman
you guys explained it much better than the BBC. sometimes i wonder if
kirill
is right and the BBC really do look down on eastern europe.
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