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Tuesday 28.06.2016 | Name days: Kitija, Viesturs, Viestards
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Economic Diary. Latvia 6th week of 2012

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The news that the New Wave contest could leave Latvia, and the GDP of our country increased by 5% in the fourth quarter of the last year, more important news – important for each of us individually and for the whole of our economy in general remained largely unnoticed.

In the web of liberty

It is not often when the residents of Latvia have the opportunity to act as part of the big and friendly Europe. But this week brought a perfect reason for that: the Minister of Economy Daniels Pavluts decided to slow down the ratification of the Anti-Counterfeiting Trade Agreement (ACTA), which caused an enormous public backlash, and with his help Latvia became part of several countries which refused to accept this agreement on their territories.

ACTA already became a reason for national protests in many European cities. This Saturday protest marches will take place in Poland, Czech Republic, Slovakia, Romania, Germany, Great Britain, Austria, Italy, Belgium, Bulgaria, Croatia, Denmark, Estonia, Lithuania, Finland, Greece, Switzerland, Hungary, USA, Canada and others. Latvia also keeps up with the progress of the European society: on Saturday, the protest march will take place near the Ministry Cabinet building.

ACTA was signed on January 26th this year in Tokyo by 22 European Union member states, Australia, Canada, Mexico, Morocco, New Zealand, Japan, Singapore, South Korea, Switzerland and USA. The goal of the agreement – is to increase the international intellectual property protection standards, including the protection from medication and other product forgery. However the rage of the people was cause by the rule about file-sharing hosts. The Internet community decided that, ACTA will significantly reduce their internet freedom. And a wave of protests covered the world. The internet – is a dangerous force.

Let’s make the GDP swiftly

Central Statistical Bureau of Latvia has published the data concerning the rise in the GDP during the fourth quarter of 2011. According to a quick review of this index, the GDP increased by 5%. It increased thanks to the great work carried out by the manufacturing (+4%) and trade (+9%) enterprises, as well as fiscal stimulation which increased the collection of the taxes by 9%. The construction sector also played a big part in increasing the GDP.

Even though the finalized data about the true increase of the GDP will be published by the Central Statistical Bureau only on the 9th of March, several experts and economists hastily commented this figure. «This is the largest GDP increase among the European Union member states», – Bank of Latvia economist Igor Kasyanov claims.

Minister of Finance Andris Vilks was also happy like a child: «The GDP increase index shows, that the decrease of the economic activity in the Euro zone did not scar Latvia. The increase rates remain to be positive».

The desire to stand up and give loud: «Hurrah!» three times was quelled however.

This is when the Nordea Banks Senior economist Andris Strazds, stood up and said that the finalized GDP data will most likely be significantly less than the initial quick review carried out by the CSB. «Looking at the statistics of the fourth quarter of 2011, clearly nothing is clear,- the expert ponders. – The indexes of the manufacturing industry and trade, which make up 30% of the Latvian economy, are dropping. Furthermore, these specific branches accurately reflect both external and internal demand. Manufacturing industry is directed towards export, and trade is directed towards the local market. If the indexes of these branches drop – it means that the demand drops as well. With this situation, it is difficult to understand just how did the Latvian economy managed to grow at all. This should mean that other sectors of the National economy should have had an increase of no less than 2% in the fourth quarter, which is unlikely. The answer for this riddle is due to be revealed in one month’s time, when the CSB publishes the finalized statistics. And it is possible that the second index will be significantly lower than the first», – Strazds believes.

Thankfully there are people living in our country that can think and are capable of resolving mathematical problems in their mind. A pity they do not work as ministers. Well, Mr. Vilks was a good economic analyst, while working in Swedbank. It seems that the minister’s post requires analyzing figures differently.

Kirsons’ repentance

The guru of the Latvian business, the owner of the largest Lido fast food restaurant network in Latvia, Gunars Kirsons made an important statement this week. He said that his largest mistake was the opening of enterprises not linked to the sphere of public catering. This, according to Kirsons, led to many of his financial problems, and problems of the Lido, which was considered to be an unsinkable «titanic» several years ago. His second largest mistake he believes to be the beginning of the process of extrajudicial legal defense. «Only jurists can make money from that, I saw no result whatsoever»,- the businessman claims.

His business was also undermined by the expansion of the international companies of McDonald’s and Hesburger to the Latvian market. «Even my grandson prefers to go there. And I have to convince him to go to Lido», – Kirsons admits.

We can only vaguely imagine how hard it was for the owner of Lido to voice these statements, since the company was a leader on the Latvian market for more than 20 years; the only local company of that kind and scale, which owned a restaurant in Tallinn and planned to open a branch in Kazakhstan. Lido on the Krasta Street was a place of interest in Riga, where many visitors of our country gladly went to dine. This is why it is no exaggeration when we say that the problems of Kirsons and his Lida – are our shared problems.

To catch up to a wave

Organizers of the New Wave contest of young singers report that the event will no longer take place in Jurmala, because «collaboration with the Jurmala City Council reached a critical point, after which further collaboration is not possible». The new site for the contest could become Riga or the Italian San Remo, or the Lithuanian Palanga, or the Russian Sochi…

The Latvian Hotel and restaurant association call for an emergency: the guests of the contest brought almost LVL ten million each year. The head of the Latio Company Edgars Sins warns that the lack of the New Wave in Jurmala will cause a drop in resort real-estate by 10-20%. Rent prices could suffer the same drop. But, if the contest relocates to Riga, the capital’s real-estate, Riga hotels and restaurants will benefit. And Jurmala will not suffer as much, because the distance between Riga and Jurmala is small. But if the New Wave leases Latvia for good, the first scenario is likely to come true.

The talks about the contest’s likely departure from the territory of our country became more apparent after the operatives of the Corruption Prevention and Combating Bureau interrogated the Russian millionaires – the «father» of the contest and composer Igor Krutoy and the Chairman of the New Wave organizing committee Alexander Shenkman during the last New Wave. Both were interrogated in relation to the deals with Jurmala real-estate, likely to be linked to the leader of the LPP/LC, aka the oligarch, aka the «bulldozer» Ainars Slesers.

 

«And tore out my sinful tongue»

The Saeima has conceptually approved of the amendments to the Law of labor during the first hearing, amendments which forbid the employer to demand the knowledge of certain languages, if they are not used in fulfilling work obligations. 60 parliamentary deputies voted for the amendments. The authors of the bill admit, that the amendments are developed so that to stop the discrimination of job seekers, who do not speak Russian. From now on employers are forbidden to present disproportionate linguistic requirements in their job offers, during interviews, excluding the cases if the completion of the work obligations is impossible without the knowledge of a certain language. Legislators note that more and more employers unfairly demand the knowledge of foreign languages, usually Russian, even in the cases when the specifics of the businessman’s work is not linked to using Russian language.

Remember the poor Latgalian

This week, about 50 residents of Latgale came to the Saeima building, to express their protest against the limitations for transporting excise products. Afterward, they went to meet with the President of Latvia, to ask him to come up with a legal initiative and return the order of border crossing and excise goods transport.

«The previous regional policy did not provide the desired effect. This is why a fresh approach is needed not only to save the catastrophic situation in Latgale, but also to ensure a long term development of the region.»- The protesters wrote in their message. They also noted that there is a high level of unemployment in Latgale, a weak business environment, apathy, alcoholism, social estrangement.

Since January the 1st 2012, the new border crossing order between Belarus and Russia became in force; according to it the amount of imported alcohol, cigarettes and petrol is limited to a minimum. This, according to the protesters, undermines the family budgets of the majority of Latgale residents. «For the most of us this kind of trade – is the only way to survive, feed our children and pay taxes»,- they believe.

The Minister of Regional development Edmunds Sprudzs reacted strictly to this protest act, claiming that, Latgale’s economy cannot be based on «legalized contraband».

Even though this might sound harsh to the residents of Latgale, but, maybe the new restriction will help the region’s economy to start developing in a civilized way. Until now Latgalians, who had the right to cross the borders of Belarus and Russia, where the excise products cost twice or even three times cheaper, using a simplified vise regime, did not have a stimulus to search for a normal job and start a normal business.

Does Dombrovskis have a plan?

The now approved «Valdis Dombrovskis’ government plan of actions» with the listed number of objectives the current Ministry Cabinet needs to handle before the next Saeima elections, has been mostly unnoticed on the background if these aforementioned events.

All and all the government has come up with 645 objectives in six key branches – the development of the human capital, creating an effective and innovative economy, effective control of the territories and the preservation of nature, State rule, cultural environment and creating Latvia’s image abroad. Every position has the success indicators.

For example: by 2014, as part of the creation of an innovative and effective economy the government is obliged to guarantee that Latvia becomes part of the list of 50 countries, which have a high competitive index. In the sphere of «Rule» the government promises to introduce Latvia into the 20 best countries for business by 2014. As part of improving the cultural environment the ministers promise to make sure that the share of cultural services and creative industry in the GDP of the country reaches 2%. And so on – in the same steamed up pace.

After the protests of the poor Latgalians, who were deprived of their last cheap pack of cigarettes and vodka, it is unclear what exactly to wish the government.

Our borders

And finally, this week Latvia has overcome another psychological barrier. The price of type 98 petrol at the Statoil petrol stations has exceeded one lat. And not too long ago the price of 90 santims per litre seemed like an impossible price. But we managed to overcome that. There are no fewer cars out on the streets. And this means that life goes on, no matter what.

Ref: 017.109.109.625


Leave a reply

  1. Maedhros says:

    Look better!
    I spend now a third of what I spent 3 years ago in gasoline, while the price almost doubled.
    There are fewer cars in the streets!
    (a look to the gasoline volume sales could help)

    Thumb up 0 Thumb down 0

Juncker urges Britons to clarify EU stance

European Commission chairman Jean Claude Juncker has on June 28 in the European Parliament called on British politicians to clarify the country’s position as to how should the exit process take place.

Embassy: status of Latvian citizens in Britain will not change after referendum

«The referendum in Britain clearly shows – politicians have to be responsible with their words and actions. The situation after the referendum, on the other hand, demonstrates that Britain’s society was not prepared for such an outcome,» – said the head of Saeima’s European Affairs Committee Lolita Cigane.

Prosecutor: Lembergs is trying to delay the viewing of the case

On Tuesday, 28 June, criminally accused Aivars Lembergs submitted a complaint against prosecutor Juris Jurass.

Criminal prosecution asked to be launched against Magonis

Corruption Prevention and Combating Bureau has submitted materials of a criminal case to the Prosecutor General’s Office, requesting the launch of criminal prosecution of the former chief of Latvijas Dzelzceļš Ugis Magonis for accepting a bribe worth EUR 500,000.

Modernization of diesel trains allowed to be carried out by 20 September

On Tuesday, 28 June, Latvia’s government supported amendments to rules that allow Pasažieru vilciens to realize to diesel trains modernization project by 20 September.

Estonian express ferries to cross Finland Gulf 12 times a day

Estonian firm Lindaliin, which operates express ferries in the route Tallinn-Helsinki and Helsinki-Tallinn has added to its number of daily trips reaching the total of 12.

Revalde turns to court against Ventspils Vice-Mayor Vitolins

Ventspils Court has yet to accept the plea from Gita Revalde, the dismissed rector of Ventspils University College, against Janis Vitolins, first deputy of the Chairman of Ventspils City Council for infrastructure affairs in relation to his statements about allegedly illegally spent municipal funds at VUC.

Lithuania pushes for preserving UK as EU partner in Russia relations

Lithuania, who has had London as an influential and likeminded partner in seeking a stricter EU position, when reaction to Russia’s aggression in neighbouring countries has been needed, suggested on June 27 preserve as much as possible from current EU-British ties.

Latvian State Police to receive 365 new cars

Today, 28 June, SEB Leasing and Sixt Leasing supplied Latvian State Police 365 new cars of brands like Open, Kia, Ford and Fiat.

Financier: Latvia will have to pay more to the EU budget

Britain paid EUR 10 billion to the EU budget every year. With Britain’s exit from the EU, remaining member states, including Latvia, will have to pay larger amounts of money to compensate the lack of funds from Britain and maintain EU long-term programmes, believes financier Vadim Yeroshenko.

Who benefits from delays in the work of SRS?

Workers of the State Revenue Service had previously noticed a black PR campaign being organized against SRS, according to the report of SRS Finance Police Administration Director Edijs Ceipe presented to the Saeima’s Anti-Corruption Investigation Committee on Monday, 27 June.

Intolerance incidents on rise in UK after leave vote

With results of Brexit referendum sinking in, over few days, social intolerance in Britain has risen sharply emerging in threats and harassment against non-English inhabitants of the UK.

Weather in Latvia to be largely warm and summer-like

Maximum air temperature in Latvia will not exceed +21° C…+26° C on Tuesday, 28 June. No significant precipitation is expected. Night-time air temperature will not drop below +10° C…+15° C.

Russia: Turkey apologises for shooting down Russian plane

Kremlin announced on June 27 that President Recep Tayyip Erdoğan of Turkey has sent a letter of apology for the shooting down of Russian military plane on Turkish-Syrian border.

450 court hearings have taken place as part of Lembergs’ criminal case

Up until now there have been 464 court hearings in the criminal case against Aivars Lembergs, as reported by the court’s press representative Raimonds Locmelis.

Volkswagen to pay 14 billion euros in U.S. for emissions scandal

Volkswagen has in the U.S. reached a 14-billion-euro-worth settlement with deceived clients and regulators in relation to its 2015 diesel car emissions scandal.

Nordea: Brexit will not cause a deep recession or financial crisis in EU

«The European Union will have to control policy following Brexit and make certain that other countries do not follow Britain’s example. There are many who are dissatisfied with processes in the European Union. It is not right, however, that the responsibility is put on the European Central Bank. The European Union can hope for economic growth because the situation has stabilized with good conditions for investments and long-term deposits,» – says Nordea Bank’s head economist in Baltics Žygimantas Mauricas.

Week in Lithuania. Vilnius western bypass to be launched in 2016

Construction on the third phase of Vilnius western bypass may be completed as early as this year and the road is expected be opened to traffic immediately thereafter, Vilnius Major Remigijus Šimašius has said.

VNT: neither the Freeport board nor officials act to increase cargo flow at Ventspils port

In the first five months of 2016 Ventspils nafta terminals transshipped a total of 3.8 million metric tons of oil products, equal to a decrease of 27% compared to the same period in the previous year.

Creation of SRS Tax and Customs Police asked to be extended until the end of 2016

Creation of the State Revenue Service’s Tax and Customs Police is requested to be extended until the end of the year, as mentioned by Edijs Ceipe, Director of SRS Finance Police Administration, at the meeting of the Saeima’s Anti-Corruption Parliamentary Investigation Committee.

EU plans to relocate the union’s banking regulator from London

The European Union is currently preparing to relocate the European Banking Authority. This decision appeared after British voters supported the plan for their country to exit the European Union, as reported by Reuters with reference to anonymous sources.

British pound continues to drop

The value of British pound has continued to fall on June 27 in Asian trading extending the record one-day decline on June 24.

German and French leaders of same opinion on Brexit process

France’s President François Hollande and German Chancellor Angela Merkel have stated they are of same opinion as to how the EU should act in the situation arising from UK’s decision to leave the bloc.

Economists: Brexit will not cause Latvia major short-term losses

Although Brexit – Britain’s exit from the European Union – will negatively impact economic development, it will not cause major short-term losses for Latvia, believes Uldis Rutkaste, economist of the Bank of Latvia.

Agronomist: summer harvest expected to be average

This year’s summer harvest may be average or low. Summer wheat harvests, for example, are expected to reach 3.9 tons per 1 ha, according to information from Latvian Rural Advisory and Training Centre.

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