bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Saturday 03.12.2016 | Name days: Raita, Jogita, Evija
LatviaLatvia

Economic Diary of Latvia. Although in the rich club, there is not time to relax

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUA long-standing event finally took place this week – the Council of the Organization for Economic Cooperation and Development approved Latvia to join the so-called rich countries club.

This provides an opportunity for more successful development of the country, as noted by Latvia’s Foreign Affairs Minister Edgars Rinkevics. Latvia’s joining of OECD has been one of the country’s main priorities for a long time.

As an OECD member state, Latvia will be able to use experience and knowledge of more developed countries and experts to help further develop all sectors of national economy and the general level of quality of life of the population. ‘Membership in the organization of some of the most economically developed countries is not an automatic guarantee for welfare,’ – believes Rinkevics.

Deputy Secretary General of the organization Douglas Frantz has noted that Latvia has managed to realize the necessary reforms for joining OECD in a very short period of time. Nevertheless, there is not time to relax. He emphasized that Latvia will join the organization with high standards, and this will open the way for unlimited possibilities to Latvia.

Frantz also commended Latvia for doing so much in such a small period of time, comparing it to sprinting. Latvia’s membership in OECD will help the organization itself to change, he said. At the same time, Frantz also mentioned that membership in OECD is only the beginning.

The next step after the decision of the OECD Council will be the signing of the official documents regarding Latvia’s joining of the organization, which will take place in Paris on 2 June. After the signing of the document and its ratification in the Saeima, Latvia will become a full member of OECD.

Business is emerging from the shadow

Another piece of good news that surfaced this week states that the proportion of grey economy in Latvia had declined by more than 1% in 2015 (in comparison with the previous year). In 2015, the index had declined to 21.3% of GDP, according to the Grey Economy Index study by SSE Riga. In 2014, the share of grey economy in Latvia was 23.5% of GDP. This index is calculated every year based on results of a survey of entrepreneurs.

44.4% of grey economy in Latvia is made up of unaccounted income, 34.9% – envelope wages and 20.7% – unregistered workers.

According to Economy Minister Arvils Aseradens, Latvia’s economy has changed and has reached a certain level of maturity with the recent decision to allow the country to join OECD.

Aseradens believes that is necessary to focus on two problems – insolvency process and grey economy. Speaking of grey economy, the minister expressed his satisfaction with the fact that entrepreneurs have become involved with solving problems related to grey economy.

Businessmen, in the form of Latvian Chamber for Commerce and Industry, Latvian Employers’ Confederation and Business Against Shadow Economy association, have prepared their own proposals to combat grey economy and its symptoms. Proposals include the refusal of application of excise tax on coffee, introduction of a monthly tax of EUR 286 on taxi transports, active combating of piracy and introduction of a receipt lottery – when consumers who submit receipts to the State Revenue Service to help authorities combat dishonest traders take part in a special lottery.

Entrepreneurs also propose developing a medium-term tax policy for the country and tie it to Latvia’s national development plan for 2014-2020. It is highly important to ensure stability and predictability of the country’s tax system, reduce the burden on labour force without increasing the administrative burden and review mandatory state social insurance fees.

Businessmen also propose introducing mandatory health insurance. Other related proposals include PIT reliefs for companies that re-invest their revenue, adopt a reverse order to VAT payment and cancel the tax on lightweight transports for taxi companies.

The new plan for combating grey economy will be presented on 10 June 2016.

Signs of stagnation

And although there are things Latvia can be proud of on a macro level, the actual situation with the country’s micro-economy is demonstrated well enough by the real estate market and consumer prices.

According to data from Balsts, Riga’s real estate market is not behind that of Vilnius and Tallinn.

The real estate market in Tallinn managed to recover after the crisis in a couple of years – the current price change in comparison with the highest point is only -9% at the moment. In Vilnius, the real estate market is developing more slowly – the price change in comparison with the highest point is currently -32.5%.

In Riga, the average price in comparison with the highest point is currently 58% lower. And although the number of purchase/sale deals in Riga has grown 26% since the beginning of 2016, compared with Tallinn and Vilnius, improvements are minimal and do not provide a clear enough picture for the future, as noted in Balsts.

The fact that deflation remains in Latvia is demonstrates that there still is a great degree of instability in the country. Although consumer prices have been growing for the third consecutive month in Latvia (0.4%), they remain below prices of 2015 (by 0.8%). It is likely that annual deflation will remain for the entirety of the first half of the year, according to Swedbank.

Ref: 017.109.109.7852


Leave a reply

Following an investment of 3.3 million, K-rauta becomes K Senukai

On Friday, 2 December, Baltics’ largest construction, repair and household goods store network Kesko Senukai opened its first new concept shopping centre K Senukai in Riga, Lucavsalas Street. This venture cost the company EUR 3.3 million.

Saeima deputies allocated record-large amount of money for «friend projects»

The money of Latvia’s budget for next year allocated not with the intention to solve problems in priority industries but rather to satisfy desires of certain politicians and their lobby groups has reached an astonishing new peak – EUR 27.9 million, according to estimates, as reported by Ir.

Income from foreign travellers in Latvia declines

In Q3 2016, Latvia’s current account had a surplus of EUR 93.4 million or 1.5% of GDP, notes Bank of Latvia economist Linda Vecgaile.

airBaltic to sell Boeing 737 after replacing them with Bombardier CS300

Latvian national airBaltic airline intends to gradually update its fleet with Bombardier CS300 aircraft. The airline plans to sell its owned Boeing 737, says Martin Gauss, Chief Executive Officer of airBaltic.

Numbers of active voters in Latvia continue to decline before next year’s elections

47% of Latvian vote-ready citizens plan to take part in next year’s municipal elections, according to results of a survey carried out by SKDS following a request from the Central Election Commission in November.

BATL: transit industry’s potential is enormous, but not used to its fullest

Baltic Association – Transport and Logistics is satisfied that real and constructive work has commenced in cooperation with LDz Logistics and Transport and Communications Institute on Latvia’s transport and logistics, including the development of a strategy for the transit industry.

Ominous milestone: one-millionth Lithuanian to leave soon

The statisticians claim that, every day, 120 Lithuanians hop onto Scandinavia and Western Europe-bound planes in search of a better life. This month, Lithuania is likely to reach an ominous and heart-wrenching milestone with the country‘s émigré number expected to go over one million. To calm down the naysayers, the estimate is unofficial.

Snowy weekends expected in Latvia

The first days of December will go by under influence from a cyclone. Because of that, many regions of the country are expected to experience snowfall. Rain is only expected along the coast. Ice is expected to form as a result and visibility will likely reduce because of snowfall.

Three European cities plan to ban diesel cars

Looking for ways to improve their quality of air, the mayors of Madrid, Paris and Athens have on December 1 expressed readiness to introduce bans on cars and trucks with diesel engines by 2025.

French President Hollande refuses to run for re-election

France’s President François Hollande has unexpectedly announced that he would not run for re-election to the post.

Several hundred Estonian reserve soldiers summoned to unexpected drills

The cabinet of ministers of Estonia ordered on December 1 to hold snap military drills to test the ability of reserve troops to reach combat readiness in 24 hours.

Freight turnover and freight traffic declines at ports

Compared to Q3 2015, the volume of freights carried by land and pipeline transport has decreased by 1.8 million tonnes or 5.5 % in Q3 2016. The most notable drop in the volume of freights carried was recorded in rail transport – of 2.3 million tonnes or 18.9 %.

EU 2017 budget to provide the most support to youth and growth initiatives

In the next year’s budget, members of the European Parliament have secured larger support to unemployed youngsters and Erasmus+, as well as initiatives for support of small and medium-sized businesses, transport infrastructure projects and research. Commitment appropriations for 2017 total EUR 157.8578 billion, and payment appropriations EUR 134.49 billion.

Vejonis picks Kalnins as candidate for NAF commander

President of Latvia Raimonds Vejonis has decided to propose National Armed Forces Joint Staff Chief Leonids Kalnins for the post of commander of Latvia’s National Armed Forces. Kalnins was previously proposed by Defence Minister Raimonds Bergmanis, according to information from LETA.

Europol releases its Christmas calendar of EU’s most wanted criminals

European Union’s police body Europol has engaged in the often commercial pre-festive period by releasing Christmas advent calendar that will reveal one of bloc’s most wanted criminals every day up until Christmas.

Expert: Latvia’s real estate market is sick

In medical terms, Latvia’s real estate market is currently sick. It will only recover once all transactions are carried out using actual market price and those whose expectations are overestimated – drop out, said real estate specialist, member of Latvian Real Estate Association and board member of Real State Jurmala Igors Danilevics.

Prime Minister: Latvia’s economic growth is not as fast as it was expected in 2015

«Looking at national economy’s growth dynamics in 2016, we have noticed drastically different ratings. On the one hand, there are positive statistics that prove Latvia’s economic growth continues. It is not as fast as it was expected in 2015. It is expected that growth will continue in the future. A few days ago opinions of multiple banking experts appeared in the public space, saying that wage growth in Latvia will speed up next year. I would associate that with the government’s decisions and the Saeima’s approved budget for 2017,» – said Prime Minister Maris Kucinskis.

Estonia’s coalition distances itself from charges against ruling party

The coalition partners of Estonia’s Centre Party, which is headed by the Estonian Prime Minister, have this week distanced themselves from charges brought against the ruling party for allegedly receiving illegal political donations.

Finland’s Prime Minister blamed for attempts to limit press freedom

The Prime Minister of Finland Juha Sipilä has denied allegations that he has attempted to affect, how press covers allegations against him and his relatives.

Restrictions for alimony avoiders and other decisions viewed by the Saeima

On Thursday, 1 December, the Saeima will decide on the new Subsistence Guarantee Fund Law. This law states that driving rights can be revoked for alimony avoiders.

OPEC oil exporters agree to reduce oil output to increase price

The Organization of the Petroleum Exporting Countries agreed on November 30 for the first time since 2008 to reduce oil supply in an attempt to make global oil prices grow. The organisatrion’s head Mohammed Bin Saleh Al-Sada stated that a cut of 1.2 million barrels a day would start from January

Tragic dormitory fire in Turkey

Police in southern Turkey has detained six people after 11 pupils and a teacher died in a dorm fire.

Tick encephalitis infection cases increased by one-third in Latvia this year

Cold November forced ticks to enter hibernation. There is reason to believe tick activity in Latvia has ended for this year, admits entomologist Voldemars Spungis.

PHOTO: world’s first Bombardier CS300 aircraft arrives in Riga

On Wednesday, 30 November, Latvian airBaltic airline welcomed the world’s first Bombardier CS300 aircraft in Riga.

Retail trade turnover in Latvia up 0.2%

Compared to October 2015, total retail trade turnover rose by 0.2 % in October 2016. Turnover of retail trade in food products decreased by 2.7 %, whereas the turnover of retail trade in non-food products increased by 2.0 %.

Newest comments