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Monday 24.10.2016 | Name days: Renāte, Modrīte, Mudrīte

Economic Diary of Latvia. How much does one student cost?

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU1 September is close. Preparing a child for the first day in school is a full-scale economic process, which includes planning time and finances, setting objectives, finding suppliers, comparing prices and making purchases. All of it is serious. With that, social and commercial organizations have started calculating the costs of sending a child to school.

The Parents for Education association has calculated that preparing a single child for school costs an average of EUR 40. This price includes text books, writing utensils and other items necessary for school. In general, costs vary depending on the education institution. If parents also have to procure school uniform, backpack and footwear, costs can reach upward to several hundred euros.

Preparing children for first grade costs the most to parents, notes the association. This is because older children can still use items left from the previous year in their next school year, so there is no need to buy new items.

According to Swedbank’s Private Finances Institute, parents will need to spend at least EUR 90 to prepare their children for school this year. Depending on certain schools, the price of school accessories may cost EUR 35 and more. Other no less important part of school expenses – sport gear – will cost no less than EUR 45. A backpack will likely cost the least amount of money – EUR 10. Parental experience, however, shows that an expensive backpack (around EUR 60) can serve several years and is therefore a more valuable investment altogether.

A survey carried out by Maxima Latvija shows that 47% of parents in Latvia plan to spend EUR 71 or more to send their children to school. 14% plan to spend up to EUR 25 and 24% of respondents plan to spend around EUR 26 – EUR 55. 15% plan to spend around EUR 56 – EUR 70.

Many parents come up with creative solutions to this matter. Some start planning these expenses in advance. Mothers, who are generally practical in planning finances, prefer to buy only the most necessary items that will serve a long time (a good backpack and high-quality writing utensils). Many save money on clothes, often buying from internet shops and second-hand shops. Children grow up quickly: brand jeans can become too small to wear after a few months.

In spite of the rush related to preparing a child for school, most families consider 1 September a holiday and plan to celebrate it. 51% of respondents will celebrate 1 September with a family dinner at home, 29% will celebrate it outside their home, 6% will attend some cultural event and 2% will go on excursions.

The market is neither alive nor dead

Latvian Real Estate Association published a big report on the state of the country’s real estate market in regions. According to the association, this sector is largely stable – prices neither grow nor fall. However, there are signs of stagnation.

In segments like private housing, apartments and commercial premises, deals are purely rational. Buyers do not acquire anything spontaneously; they carefully compare prices, location and quality. With that, there has been a notable increase in the number of deals with agricultural land. This segment has seen deficit of large areas, which can potentially increase prices by up to 30%.

In general, the real estate market is mostly ruled by local buyers who carefully count their money. With that, this industry is neither alive nor dead. Vidzeme stands out in this. This region is noteworthy with the largest level of economic activity: plenty of jobs and good development conditions. The market is more active there, but it is focused mainly in three cities – Valmiera, Smiltene and Cesis.

In Latgale, deals are mostly carried out with agricultural land.

Interesting events are noted in Kurzeme – banks have almost cleared out their portfolios, having sold objects they had collected during crisis years. With that, they are gradually leaving Kurzeme’s real estate market. Because of that, projects that had been previously frozen are now coming back to life in Liepaja, now that they have changed hands and have been completed by their new owners. There is a lot of interest for these apartments, which is largely because of attractive prices.

In general, the real estate market is a mirror of a country’s economy: if nothing changes, the market remains where it is.

With hopes in the future

The fact that Latvia’s economy is not experiencing anything drastic at the moment is also shown by results of the latest Citadele Index. The value of the index, which reflects the mood of entrepreneurs, was 48.15 points in Q2 2015.

Values that do not exceed 50 points show that entrepreneurs are not satisfied with the state of things in the country and their company. The latest index shows that entrepreneurs believe the state of things has worsened in Latvia in the past six months. The index has stayed on the same level these past four quarters – within 48-49 points. This means entrepreneurs are mostly pessimistic, as explained in Citadele.


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