bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Saturday 21.10.2017 | Name days: Severīns, Urzula
LatviaLatvia

Economic diary. How business influences politics

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe situation in Ukraine has undoubtedly overshadowed all other political events this week. Latvian politicians condemn the actions performed by Russia in Crimea. However, there are no serious talks about any real economic sanctions against Latvia’s eastern neighbour: everyone knows how application of sanctions against Russia would impact Latvia’s economy.

This mostly applies to transit. Russian cargo make up 60% of all cargo handled by Latvia’s sea ports. Argo includes coal and oil products. Investor visas issued to residents of the neighbouring country in exchange for real estate properties and investments also add finances to Latvia’s state treasury. Over the course of this programme’s existence, Latvia’s economy acquired nearly EUR 900 million.

Even though some Saeima deputies are against the issue of temporary residence permits until the situation in Crimea has stabilized, it is likely there will be no decisions made in this regard. Entrepreneurs who have once worked with potential investor visa recipients are also against it: it is hard to regain the interest of foreigners for this programme if it is stopped at least once, they say.

It is worth adding that Latvian and Lithuanian politicians managed to avoid the application of economic sanctions against Belarus in 2012. This was mostly because of the pressure of domestic businessmen. The European Union had to make do with smaller measures.

As it was said by businessmen after the whole ordeal with Belarus, the situation was resolved in a way that barely impacted Latvia’s economy. In other words – the influence of businessmen in solving political situations should not be underestimated.

Until the situation has stabilized

Unfortunately, Latvian companies that remain in Ukraine are having a tough time. For example, a store owned by Dzintars in the middle of Kyiv had to be closed. The reason – a fire that started during armed riots.

Brīvais vilnis fish processing plant has decided to discontinue all supplies to Ukraine. In response to the drop in value of the Russian ruble, the company has also decided to reduce export to Russia as well.

The most unpleasant factor of Latvian exporters is the devaluation of the Ukrainian hryvnia. Finally, Latvian Guarantee Agency has decided to temporarily halt insurance operations with transactions related to Ukraine. According to the agency, insurance operations for export contracts will be continued as soon as the situation in the country has stabilized.

In spite of the growing tension between Russia and the EU, Latvian Guarantees Agency continues insuring foreign trade transactions with Russian companies. There are currently 27 guarantees issued to 14 Latvian companies. In the eyes of this agency, Russia has a low level of political and commercial risks among all CIS countries.

Money loves count

The situation in Ukraine has yet to affect regular residents of Latvia. Consumers live as usual. However, according to data of the central Statistical Bureau of Latvia, residents have become more careful in their expenses. In January 2014, the volume of retail trade had increased 3.2% in comparison with that of January 2013. In comparison with December 2013, however, there was a 0.6% reduction.

As it was expected – residents need time to get used to new prices. According to statistical data, purchasing activity had been steadily reducing as the end of 2013 drew closer. The same trend is expected for 2014 as well.

According to Swedbank senior economist Lija Strasuna, retail trade sector may start growing again in the second half of the year. The total increase is expected to be 4-5%. Growth of wages and unemployment level will contribute to this, as will the reduction of labour taxes and pension indexation.

Life is getting better

Information about wages in Latvia was published by the Central Statistical Bureau of Latvia. In 2013, the size of average gross income in Latvia was EUR 716, which is 4.6% than it was in 2012 (EUR 685).

Average wages were also higher in specific sectors: employees of the finances and insurance sector had wages of EUR 1,531, employees working in IT and communications sector – EUR 1,158. Average wages of employees in energy sector were EUR 1,000. Outsiders in this list can be considered the entertainment and accommodations sector (EUR 455), education sector (EUR 602) and real estate sector (EUR 602).

DNB Bank economist Peters Strautins believes there was an increase of purchasing power last year. Statistical growth in 2012 was secured thanks to the growth of available jobs and work time. However, the actual effect was eaten away by inflation.

Ref: 017.109.109.4221


Leave a reply

Professor: by taking money away from science, the state shoots itself in the foot

The matter regarding insufficient funding for science has recently become more topical in the public space. President of Latvian Academy of Sciences Ojārs Spārītis is rather critical of the situation: Latvia has lied to the European Union and European Commission about making sure that funding for science reaches 1.5% of GDP by 2020.

To prevent fraud, audit of MPC recipients to be performed in Latvia

Latvian Economy Ministry intends to perform an audit of mandatory procurement component recipients and use new regulations to combat fraudulent activities, as confirmed by Economy Minister Arvils Ašeradens.

Rail Baltic procurements to be processed using Electronic Procurements System

Following the changes to Latvian Republic’s Public Procurements Law, all new procurements for Rail Baltica administered by RB RAIL will be processed using a free electronic information system and its e-contest subsystem.

Estonian construction price index pushed up by wages

The construction price index in Estonia has in July-September of 2017 increased by 0.9% in comparison to second quarter this year and by 1.7% from July-September of 2016, Estonian statisticians have estimated.

Surplus of Latvia’s government budget reached 9.5 million euros in 2016

In 2016 general government budget surplus accounted for EUR 9.5 million or 0.04 % of the Gross Domestic Product, whereas general government consolidated gross debt amounted to EUR 10 091.6 million or 40.6 % of the GDP.

Latvia to invest EUR 5.9 million into formation of unified port network

Ports of Riga planning region and Kurzeme planning region have commenced an important tourism project. The goal of this project is creating a unified yacht port network in Latvia and Estonia with quality services that would allow developing sailing tourism and attract foreign sailing enthusiasts in the future, reports the regions’ representative Inese Ozoliņa.

Graft-suspected Tartu deputy mayors resign

In Estonia's second largest city, Tartu, Deputy Mayors Artjom Suvorov and Valvo Semilarski have stepped down from office, Estonian press reported, after the politicians were arrested under suspicion of graft.

Expert: workers of Latvia’s NGO sector have high ‘burnout’ risk

Workers of Latvia’s NGO sector have a high burnout risk, said once the director of Providus Dace Akule in an interview to Latvijas Radio.

Producer: many young people come to work in the film industry

Latvia’s film industry has been steadily growing these past several years, and it is especially gratifying that many young people are coming to work in the industry, says director and producer, representative of Film Angels Productions Jānis Kalējs.

Pollution blamed for every sixth premature death globally

Nine million premature deaths globally in 2015 are said to be related to pollution, a study has found pointing to presence of harmful matter in air, water and workplace as the three main risk factors.

Infectologist: influenza kills biologically the weakest, including children and pregnant women

Influenza is an infection that affects both children and adults. However, it kills those who are biologically weak, says Immunization State Council chairperson and infectologist of Children’s Vaccination Centre Dace Zavadska.

Investor activity made easier between Latvia and Vietnam

An intergovernmental agreement has been signed between the Republic of Latvia and Socialist Republic of Vietnam on prevention of double taxation and tax avoidance in relation to income tax.

Colder masses of air to enter Latvia in coming days; precipitation to be limited

Although high atmospheric pressure will be present above Latvia in the coming days, southern regions in Latvia will experience short-term precipitation on Saturday, 12 October, caused by the cyclone active above Poland. Colder masses of air will enter Latvia in the coming days.

Maltese journalist said to be killed by remotely-controlled explosive

Officials in Malta have unveiled it is assumed that investigative journalist Daphne Caruana Galizia was murdered by an explosive places under her car, which was detonated remotely.

Prime Minister: Latvia cannot accept additional asylum seekers

Latvia cannot afford to resettle additional asylum seekers, said Prime Minister Māris Kučinskis during his meeting with European Commission President Jean-Claude Juncker on Thursday, 19 October.

Scandinavians purchase tourism company in Lithuania; changes expected in Latvia too

Dutch Otravo online travel organization has expanded and has purchased Lithuanian online travel agency Interno Partneris, thereby entering the Baltic market.

Ombudsman: non-citizen status matter should be resolved in next decade

The next ten years may be the transition period to ‘put an end’ to the non-citizen status in Latvia, said ombudsman Juris Jansons in an interview to LTV programme Rīta panorama.

Swedish Foreign Minister: harassment exists at highest political level

The Foreign Affairs Minister of Sweden, Margot Wallström, has commended the current sexual assault and harassment awareness campaign in social media and urged to fellow politicians to address the problem.

Latvenergo recognized as Latvia’s most valuable company for tenth time

Latvenergo has been recognized as Latvia’s most valuable company in 2017. Its value grew 34% in comparison with 2016, according to the TOP 101 list of Latvia’s most valuable companies compiled by Prudentia and Nasdaq Riga.

Number of births and number of deaths decline in Latvia

During the first nine months of this year 15,723 babies were born in Latvia, which is 1,113 children fewer than in the corresponding period of the last year.

CC applies binding conditions for the sale of MTG Broadcasting AB

Latvian Competition Council has decided to permit Bite Lietuva to purchase MTG Broadcasting AB group’s businesses in Latvia. CC has applied several binding conditions to prevent a possible impact on competition on the television services and advertisement market.

Eesti Energia warns: Limiting CO2 emissions on capacity could endanger energy supply

Estonian energy giant Eesti Energia has evaluated that a plan under discussion in the European Union to introduce a carbon dioxide release limit for capacity mechanisms to qualify for subsidies could adversely affect the security of supply in Estonia and the Baltic states.

Solidarity tax norm recognized as non-compliant with Latvia’s Constitution

On Thursday, 19 October, the Constitutional Court of the Republic of Latvia declared the Solidarity tax norm as non-compliant with the country’s Constitution.

Survey: Riga residents go to the doctor’s the most often

34% of residents undergo regular health checks, according to Mana Aptieka & Apotheka health index. In addition, women are twice as serious about health checks as men.

LG cozies up with idea of rebuilding railway tracks to Reņģe, Latvia

Lithuania‘s Lietuvos Geležinkeliai has sent a mixed message as to what it intends to do next following an EC fine of nearly 28 million against it over the dismantling a 19-km railway stretch with the Latvian village of Rengė.