bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Friday 18.08.2017 | Name days: Liene, Helēna, Elena, Ellena, Liena
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

Latvia’s export growth was moderately rapid in the first six months of 2017

Compared with the same period of 2016, Latvia experienced a moderately rapid export growth in the first six months of 2017, according to data published by Eurostat on Thursday, 17 August.

Latvia’s annual inflation in July was one of the highest in Europe

Inflation indexes in Latvia and the UK both reached 2.6% in July, which is one of the highest indexes in the European Union, according to data published by Eurostat on Thursday, 17 August.

Kirsis withdraws his candidacy in favour of Aseradens

Riga City Council member Vilnis Kirsis has decided to withdraw his candidacy from the race to become chairman of Unity in favour of a different candidate – Economy Minister Arvils Aseradens.

Rinkevics expresses Latvia’s interest in maintaining political consultations with Palestine

On Thursday, 17 August, Latvia’s Foreign Affairs Minister Edgars Rinkevics met with the leader of Palestine’s diplomatic mission in Latvia, ambassador Taissir Al Adjouri, to discuss mutual relations between Latvia and Palestine and the peace process in the Middle East.

Putin grins to the world’s seven billionth baby, Lithuania wary of border incidents

Russian President Vladimir Putin paid a visit this Wednesday to Kaliningrad, the westernmost point of Russia, but the reports about his trip in the Russian enclave and over the border in Lithuania were strikingly different.

Survey: red considered the safest colour for a car

Most Latvian drivers consider red to be the safest colour for a car. The most popular, however, is black, according to results of a survey by Virši-A fuel trader.

airBaltic’s number of carried passengers reaches a record in second consecutive month

Latvian airBaltic airline carried 393,312 passengers in July 2017, which is 21% more than the same period last year. The number of passengers carried by airBaltic remains the highest it has ever been in the airline’s history, BNN was informed by the company.

Brivais vilnis: nearly all fish processing companies are experiencing losses

Currently nearly all fish processing companies in Latvia are experiencing major or minor losses, says Brivais vilnis chairman Arnols Babris.

American helicopters to perform low-altitude flights within Latvia’s airspace

U.S. Air Force Brigade’s Task Force Phoenix helicopters, which are stationed in Latvia as part of Atlantic Resolve operation, will be performing low-altitude flights from 16:00 to 18:00 from Lielvarde to Dobele on Friday, 18 August.

Healthcare Ministry’s state secretary Karlis Ketners may be replaced

Latvian Healthcare Ministry may replace its state secretary Karlis Ketners. It is possible he will be transferred to work at Finance Ministry, as reported by LTV.

Suspects in Europe's insecticide egg scandal before Dutch court

In the Netherlands, two men have been in court in relation to the scandal of eggs containing banned insecticide that has caused an EU-wide health scare and cost millions of euros of damages.

Indian national with fake documents apprehended on Latvian border

An Indian citizen travelling from Moscow on a bus was caught at Terehovo border control point in Latvia for presenting officers a fake EU family member’s resident card. No criminal process was launched. The person returned to the country he was travelling from.

Latvijas dzelzceļš will not have to pay dividends from last year’s profits

The government decided on Wednesday, 16 August, that Latvijas dzelzceļš will not have to pay dividends from last year’s profits, which were EUR 880,998.

Latvian citizenship provided to 103 people

The Cabinet of Ministers has issued an order to provide Latvian citizenship to 103 people through naturalization.

Estonian Inbank's profits reach EUR 5.7 million in six months

Estonian financial services' provided Inbank made a profit of 5.7 million euros in the first half of 2017, which is a 429.4% increase compared to the respective period in 2016.

Agriculture Ministry invites residents to sign up for measures to support fisheries

From 21 August onward, Rural Support Service plans to start accepting applications for projects to receive support from European Maritime and Fisheries Fund’s action plan for development of fisheries in 2014-2020 as part of projects Innovation, Productive Investments in Aquaculture and Fishing and Aquaculture project processing.

Estonia seeks to improve reputation of state as employer

As the Estonian Ministry of Finance wishes to boost the reputation and brand of the Baltic country's public sector, it has announced a procurement tender aimed at preparing an action plan for reaching these goals.

Warning: there may be short-term problems with Swedbank internet banking functionality

Because of Swedbank’s planned IT modernization work scheduled for the night to Thursday, 17 August, there may be short term problems with payment card and internet banking functionality, the bank warns.

Aseradens: neither Usakovs nor Lembergs should be allowed to become prime minister

If he became chairman of Unity, Economy Minister Arvils Aseradens would mobilize democratic forces to prevent the possibility of either Aivars Lembergs or Nils Usakovs becoming prime ministers, Aseradens said in an interview to 900 seconds programme of LNT.

Caksa believes increasing wages for doctors would improve politicians’ credibility

The planned wage increase in healthcare could be the first step towards improving politicians’ credibility, says Healthcare Minister Anda Caksa.

Bill Gates donates USD 4.6 billion, reduces shares in Microsoft

The co-founder of the U.S. computer software firm Microsoft, Bill Gates, has allocated to charity 4.6 billion U.S. dollars (3.9 billion euros), which is the philanthropist's highest donation since the year 2000.

LOSP proposes using electronic packing slip system to reduce fraud

An electronic packing slip system for goods would be invaluable for agricultural goods, because it would help push out and reduce VAT fraud, says Latvian Agricultural Organisation Cooperation Council.

Latvia and Russia agree on exchange of additional 3,000 universal permits for cargoes

Latvia and Russia will exchange 7,000 universal permits for international cargo transports in 2017. This will be the largest universal permit volume in the past 15 years, as reported by Road Directorate.

Sierra Leone hit by tragic mudslide

A tragic mudslide has taken place in Sierra Leone, where flooding in the capital Freetown caused a mudslide, in which nearly 400 people have been have died.

Talks with potential KVV Liepājas metalurgs buyers to conclude in August

Talks with potential buyers of the insolvent KVV Liepājas metalurgs will conclude at the end of August, says representative of the company’s insolvency administrator Dzintars Hmielevskis.