Even though one of the most important events for Latvia took place abroad, it will have serious implications for the country. Eccentric millionaire Donald Trump was elected as president of USA, an important partner for Latvia in economic and defence matters.
Latvia is prepared to work with the administration of any U.S. president chosen by the American people, as Latvia’s Foreign Affairs Minister Edgars Rinkevics announced shortly after Trump’s victory announcement. He also urged residents not to panic over the results of the elections in USA. Previously, Latvian officials voiced their concerns about Trump’s possible victory in presidential elections in USA.
Unfortunately, concerns did not disappear after Rinkevics’s request. For example, Swedbank senior economist Martins Kazaks said GDP of Baltic States will continue to grow after Trump’s victory. He added growth will be slower than expected. It is also likely that rapid growth of investments will likely be put off for a time.
Kazaks explained the reason for uncertainty with the lack of understanding of Trump’s political initiatives, as during his election campaign he voiced many controversial opinions and proposals. This is why the reaction of financial markets was nervous.
Nevertheless, nervousness will soon fade, Kazaks said. It is likely, however, that high risk of rapid fluctuations will remains for a long time, as it is unknown what Trump has in store for global economic relations and security policy.
Uncertainty and obstacles have a negative influence on small economies like the Baltics, said Kazaks.
He noted that populism is expected to rise in Baltics and Latvia. On top of that, a populist party had won elections in Lithuania this October.
Regardless, said the economist, there are no reasons to expect radical changes for economic and foreign policies. Latvia remains part of the EU, Eurozone and NATO. Political stability in Latvia will largely depend on EU’s ability to deal with current challenges, Kazaks added.
Politologist Andris Spruds is more categorical in his opinion. According to him, the unpredictable nature of the new president in USA could motivate European countries to ask Russia for support. The unity of the Trans-Atlantic community is fractured. This is because of Brexit, the position of Central and Eastern Europe on the refugee matter and the upcoming referendum in Italy. Russian president Vladimir Putin can benefit from this situation and he has ample room to maneuver, the politologist said.
SRS has a new leader
Another important event for Latvia took place this week. The government has finally found a new leader for the State Revenue Service – Ilze Cirule. Her term begins 14 November.
As BNN had previously reported, Cirule previously worked in the board of Balta Insurance. She had also worked in insurance companies Parekss and Gjensidige Baltic.
According to Cirule, she has no skeletons in her closet. She intends to enhance the service’s analytical side and make it more business friendly. Cirule also offers to reduce the volume of cash money. This, according to her, will help combat grey economy more effectively.
Latvian Days in Minsk
Meanwhile, the life of businessmen continues regardless of whether or not SRS has a new leader. This week marked the beginning of Latvian Days in Minsk, which will last until 10 December.
Opposite to some expectations, Latvia’s membership in the EU has not reduced its attractiveness from the perspective of economic cooperation with Belarus. The main spheres of cooperation between the two countries include transit, trade, woodworking, innovations and IT, as well as cooperative realization of investment projects.
In 2015, eternal trade turnover of goods between Latvia and Belarus was EUR 522.4 million. Belarus became Latvia’s 15th most important external trade partner. Exports from Belarus traditionally take 2nd place in Latvia’s overall volume of railway transports. The volume of goods and services exported to Belarus reached EUR 190.9 million in 2015. The volume of goods and services imported from Belarus reached EUR 3.331 million or 2.2% of Latvia’s entire import volume.
This means there is great potential for improvement of indexes in investments. Matters of economic cooperation will be discussed as part of Latvian Days in Belarus.
Falling behind our neighbours
According to information from the Central Statistical Bureau of Latvia, the country still exports and imports less than Lithuania and Estonia.
Volumes of Latvia’s exports and imports for the first eight months of 2016 were below indexes of Lithuania and Estonia. The biggest balance deficit in foreign trade among Baltic States was noted in Lithuania this year.
In the first eight months of 2016 Latvia’s export volume reached EUR 6.52 billion. Lithuania exported goods worth a total of EUR 14.41 billion and Estonia exported goods worth EUR 7.71 billion.
Latvia and Estonia exported 74% and Lithuania exported 61% to Europe.
From Europe, Latvia imported 80% of the total volume of the country’s imports (Lithuania imported 70% and Estonia imported 84%).