Deflation remains in Latvia. It is bad sign even though some experts try to present the economy’s hanging state as «healthy deflation». True – there are many directions in which progress has been noticed lately.
This week, the Central Statistical Bureau of Latvia reported that consumer prices in Latvia had declined 0.7% in August in comparison with July.
In the first twelve months, the average level of consumer prices has declined 0.3% in comparison with the previous year.
The biggest influence on price change in August was caused by the decline of prices on food products and non-alcoholic beverages, transport goods and services, clothes and footwear. More influence on prices was caused by the increase of prices on leisure and culture services.
It is typical for August for prices to decline. In addition, the price level was largely affected by the decline of world prices on oil in July, as reported by Economy Ministry.
According to the institution, the annual inflation level could be close to zero. This means only one thing: the economy neither declines nor grows – it is stuck in one place.
Looking for black gold
Activity has been noticed in endeavours to find oil in Latvia this week. Lithuanian Geobaltic has expressed its wish to receive a license to survey Kuldiga’s territory in search of hydrocarbons – primarily oil.
In May 2016, the aforementioned company submitted a request to Latvia’s Economy Ministry to receive a license for the survey and production of hydrocarbons in Kuldiga.
According to the Economy Ministry, territories added to the Lithuanian company’s request are part of the oil deposit that was opened in Kuldiga in 1963 – the only oil deposit in Latvia at the moment. It was found buried 950-960 m below sea level. Its total area is close to 76 ha. Oil stores in this deposit are estimated around 770,000 m3. It is possible to collect approximately 950,000 barrels worth of oil from this deposit.
An agreement is finally reached
Progress has been noticed in the Rail Baltica project as well. This week, Baltic States finally reached an agreement on procurements that will be organized for the realization of this project. Members of RB Rail Council agreed in Brussels that procurements will be divided in three categories – procurements organized by RB Rail; joint procurements realized by the joint company and procurements performed by national organizations under supervision.
All procurements will have a single standard. All of them will be realized in accordance with the main rules that will be developed by RB Rail.
Previously, Chairman of the Tourism and Transport of the European Affairs Committee Michael Kramer announced that the three Baltic States could lose the funding for the project if they fail to reach an agreement on Rail Baltica project.
He noted that he does not understand Lithuania’s stance on the organization of procurements separately from other Baltic States and not through the joint company.
Last year, the European Commission allocated EUR 106 million for the realization of Rail Baltica project in Lithuania. This year’s funding reaches nearly EUR 191 million.
Under China’s sign
Economy Minister Arvils Aseradens departed for China this week to hold talks with Chinese officials on topics related to the development of economic cooperation between Latvia and China.
Trade volumes between Latvia and China grow year after year. China is Latvia’s second largest trade partner among countries that are not part of the European Union. According to Aseradens, Latvian companies are interested in cooperation with China. This is proven by the big delegation of Latvian businessmen that accompanied Aseradens during his visit. Many Latvian products have found a niche in China. Consumers value Latvian products and their quality, the minister said.
The Chinese market has been entered by products manufactured by Food Union, Cido, Gamma-A, Piejura, Brivais vilnis, Kolumbija, Karumu fabrika, Pure Chocolate, Rāmkalni, Rigas dzirnavnieks, Aerodium, SAF Tehnika, Mikrotikls, Stenders, Sino Business Links and other Latvian companies.
Latvia is interested in closer cooperation with China in industries like transport, logistics, woodworking, food product processing, ICT, innovations and high technologies, education, tourism and others.
The minister also took part in Discover Latvia business forum that was organized in Ningbo. Latvian and Chinese officials discussed topics related to business development.
Discover Latvia business forum was attended by representatives of 20 Latvian companies that represent transport, logistics, food processing, cosmetics, textile, design and other sectors.