bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Wednesday 21.02.2018 | Name days: Eleonora, Ariadne
LatviaLatvia

Economic Diary of Latvia. Switching summands sometimes results in a different sum

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe decision of the British population to leave the European Union will remain topical in the world for a long time. And although the ‘farewell letter to Brussels’, as noted by Chairman of European Commission Jean-Claude Juncker, will not be sent by Britain until autumn and no new government will be formed until then, economists, experts and analysts are already engaged in calculations of the possible damage that will be caused by Britain’s exit.

Belgium, Netherlands, Ireland, Cyprus, Luxembourg and Malta will likely suffer the most from Brexit, according to experts from Fitch. Goods form those countries form around 8% of Britain’s imports. In the event of London establishing import fees, financial losses will be unavoidable for continental Europe. Furthermore, Cyprus, Malta and Netherlands all serve as Britain’s internal offshores. Britain is a financial hub for all of Europe. These countries service a large number of tax optimization transactions.

It is possible that Poland, Hungary, Czech Republic, Lithuania and Latvia will suffer losses as well. This is why there are a lot of migrant workers in Britain who arrived from those countries. Half of the income those people earn in Britain they also send to their home countries. Households in those countries will likely lose their usual income. According to estimates, it could be a massive hit: nearly 10% of GDP of those countries is secured by compatriots working abroad.

According to data from the Latvian Employers’ Confederation, money transfers from Latvians living abroad have had positive impact in supporting Latvia’s economy. From 2005 to 2015 the volume of such transactions were reaching 7% of GDP. 2014 turned out a record year – Latvian migrants transferred not only the largest sum of money since the opening of borders (EUR 717.5 million), but also managed to end up on 1st place among Europeans in terms of the total volume of money transfer ratio to GDP (nearly 6%).

According to information from the Foreign Affairs Ministry, which claims there are 370,000 Latvians living abroad, it can be assumed that the average level of money transfers to Latvia per capita is nearly EUR 1,900 per year or EUR 150 per month (in 2015).

Even now Latvians working abroad are complaining about intolerance coming from local residents. And even though promises are voiced on the highest political level to prevent any forms of discrimination towards migrants, many may decide to return to their home country due to pressure from locals.

This, however, would impact Britain’s economy the most. Shortly after the referendum Fitch reduced the country’s sovereign rating from AAA to AA. Even before that S&P had reduced Britain’s rating from AA+ to AA.

On the eve of the referendum, The Society of Motor Manufacturers and Traders of Britain announced that Brexit may result in around 800,000 people losing their jobs and the economy would lose around GBP 15.5 billion.

According to the head of the European Central Bank Mario Draghi, Britain’s decision will cost Eurozone 0.3-0.5% of GDP.

Russia will continue its «diet»

Political perspectives and economic future of the EU after Brexit was discussed by European leaders this week. Brexit discussion took the entire meeting even though EU leaders had also planned to discuss the matter of extending sanctions against Russia (in force until 31 July). The decision on the latter was made on 1 July.

Meanwhile, President of Russia Vladimir Putin decided not to postpone anything and simply issued a decree to extend the standing embargo on imports of agricultural products until 31 December 2017. This means USA, EU, Canada, Australia, Norway, Albania, Montenegro, Iceland and Lichtenstein will not be able to export goods like beef, pork, poultry, fish, cheese, milk, fruits and vegetables, as well as some other categories of products to Russia.

Earlier Latvia’s Agriculture Ministry prepared reports, according to which non-compensated losses of Latvia’s dairy industry would reach EUR 132.7 million by the end of the year. If sanctions are extended for the next 3.5 years, however, losses will reach EUR 233.5 million.

«We will leave for the North»

As we all know, Latvians are not all that intimidated or surprised by anything these days: they will always find a way out. While some are looking for happiness in other countries, others manage to return home from working abroad every evening. As it became known this week, 40% of Latvian would relocate to Estonia for higher salaries and friendlier taxes. This is shown by results of a survey by cvmarket.lv.

Previously there was some information that suggested more and more Latvians go to work in Estonia. Estonians, on the other hand, more often travel to Finland with the same goal in mind.

Residents from Vidzeme, which borders with Estonia, more often look for jobs in the neighbouring country. Residents of Valka are the luckiest in this regard – Estonia is just around the corner for them. Latvians find jobs in Tallinn, Pärnu, Tartu and nearby areas. Tallinn office of Ericsson employs Latvians. This example is followed by Scarfil from Pärnu, Finmec from Maardu and others. Enics branch in Elve also organized transports of its Latvian employees from Valga.

Latvians are interested the most in wages offered by Estonia: the average wage in this country was EUR 1,045 in 2015 (EUR 829 in Latvia). Latvians are also attracted by work culture and employers’ attitude towards their workers.

Transports of labour force between Valka and Valga are similar to a pendulum: people travel from Latvia to Estonia to work and return every day. Latvians do not change their residence. This could change soon because the interest of Latvia’s for real estate in Valga increases every year.

It is possible that Estonia may take Britain’s place in regards to Latvian migrant workers’ top destination.

Ref: 017.109.109.5791


Leave a reply

Dismissal requested for Latvia’s Finance Minister; parties worried about finance sector sinking deeper

Latvia’s Finance Minister Dana Reizniece-Ozola has failed to prevent the decision made by United States Department of the Treasury, which is ruinous for the country’s financial sector and humiliating for its reputation, says chairman of New Conservative Party Jānis Bordāns.

Defence Ministry: a massive information campaign is being realized against Latvia

Considering events of the last several days in the country’s banking sector and the arrest of the governor of the Bank of Latvia – Ilmārs Rimšēvičs – it is entirely possible that someone is currently realizing a massive information operation. Its structure and execution is not unlike the one observed in USA, France and Germany during the pre-election period, BNN was told by Latvia’s Defence Ministry.

Latvian parliament to search for ways to dismiss current Bank of Latvia governor

Members of Latvia’s Saeima plan to search for a solution in the matter regarding the possible dismissal of the governor of the Bank of Latvia Ilmārs Rimšēvičs.

Bank of Latvia governor: I have received death threats

«This situation is incredibly complicated. This situation is quite possibly the most complicated one I have ever been in. I feel a great deal of support from people I don’t know, as well as my friends and family members. I have decided to not back down – I am innocent. The the people attacking my reputation have only one goal in mind – to have me step down,» said the governor of the Bank of Latvia Ilmārs Rimšēvičs during a press conference on Tuesday, 20 February.

Proportion of people working in Latvia’s culture sector is larger than the average in EU

The number of people working in Latvia’s culture sector is equal to 4.5% of the total number of employed people in the country. This proportion is also larger than the average one across the European Union, according to data published by Eurostat.

Ministry: idea for compulsory secondary education should be put on hold for now

Considering that Latvia’s Education and Science Ministry has several ongoing industry reforms, it would be best to put the proposal for compulsory secondary education on hold, said Education and Science Minister Kārlis Šadurskis during a meeting of Saeima’s Education, Culture and Science Committee.

Association: ECB should become more involved in resolving Latvia’s financial scandal

Association of Latvian Commercial Banks sees a need for the European Central Bank (ECB) to become more involved in the discussion and help resolve the situation, considering evaluation of ABLV Bank’s business model is in direct competence of ECB.

Hesburger to invest 11.5 million euros in Baltics this year

The largest fast food catering restaurant network in Finland and Baltic States – Hesburger – plans to invest approximately EUR 11.5 million in business development this year. EUR 5.5 million are planned to be invested in Latvia’s market, says Hesburger Development Director Ieva Salmela.

Air temperature drops below -30° C in certain parts of Northern Europe

On Tuesday, 20 February, air temperature in central and northern parts of Finland dropped to -27° C… -31° C in morning hours. In Norway, close to the Finnish border, air temperature has dropped as far as -34° C, according to data from meteorological stations.

FCMC suspects someone may want to undermine Latvia’s financial sector

It is not impossible that someone may want to undermine Latvia’s financial sector, said chairman of Latvian Finance and Capital Market Commission Pēters Putniņš in an interview to Rīta Panorāma programme on Tuesday, 20 February.

European exchange indexes decline; Wall Street enjoys a holiday

European exchange indexes declined on Monday, 19 February. No trading was performed at American stock markets, because the country was celebrating President’s Day.

Party: Latvian banking system’s crisis threatens Skanste neighbourhood's development

There are serious risks associated with European Union’s co-financed project for the revitalization of Skanste neighbourhood, including construction of Skanste tramway line, says member of Riga City Council and For Latvia’s Development party Viesturs Zeps.

Public opinion: KGB documents should be made publicly accessible immediately

Latvia’s society believes the KGB documents should be made publicly accessible immediately. In addition, residents say they are confident in their ability to discuss those documents without the country’s supervision, which takes the form of expert opinions prevailing over society’s moral views, as stated by guest researcher of History Institute of the University of Latvia M. His. Marta Starostina.

For Latvia’s Development: the prime minister is gone, but finance minister claims otherwise

«What we have observed in the past several days is that Latvia’s financial sector has received several heavy strikes as a result of the government’s uncoordinated and chaotic actions. Prime Minister Māris Kučinskis has evidently ‘disappeared’ and offers no clear plans to resolve the crisis, whereas Finance Minister Dana Reizniece-Ozola says different things in every interview. Such behaviour will not help resolve the crisis. It could instead pull the country’s financial sector in a much deeper crisis,» says chairman of For Latvia’s Development Juris Pūce.

Bank of Latvia provided ABLV Bank with a loan of 97.5 mln euros in exchange for securities pledge

The Bank of Latvia has provided ABLV Bank with a loan worth EUR 97.5 million in exchange for securities pledge, as confirmed by the financial institution.

Prime Minister: Bank of Latvia governor is not allowed to take official post

As a security measure, the governor of the Bank of Latvia Ilmārs Rimšēvičs has been applied with a prohibition to take post, said Latvian Prime Minister Māris Kučinskis after a meeting of the Cabinet of Ministers.

Poland's halt to logging in ancient forest came after irreparable damage

Although Poland has stated logging in the old-growth Bialowieza forest has been stopped, Warsaw has failed to reveal the amount of trees already cut down.

«A good friend» pays 100,000 euro bail for arrested governor of the Bank of Latvia

Corruption Prevention and Combating Bureau (CPCB) has applied a bail of 100,000 euros for the arrested governor of the Bank of Latvia Ilmārs Rimšēvičs. The bail has already been paid to the State Treasury account, as confirmed by his lawyer Saulvedis Vārpiņš.

NP: ABLV blames Latvian officials for misleading foreign institutions

Last week, the reputation of Latvia’s second largest bank – ABLV – was seriously impacted. It is believed that money laundering was this bank’s main operation, and that it failed to comply with the prohibition on cooperation with North Korea. The bank is also accused of bribery. US Department of the Treasury Financial Crimes Enforcement Network rarely speaks so directly of any credit institution, says Nekā personīga programme.

Changes to third-country student residence in Estonia to add more responsibilities to university staff

The Estonian government has backed planned amendments are to the Aliens Law implementing an EU directive into Estonian law, which change how third-country nationals on enter and reside in Estonia if they are study or performing research work.

Russia criticises U.S. charges of Russian meddling in U.S. election

The Foreign Minister of Russia, Sergei Lavrov, has criticised the charges announced by the U.S. Federal Bureau of Investigation, against 13 Russian nationals and three companies for election meddling.

Government plans to form four riot prevention units in Latvian regions

The State Police plans to form four riot prevention units in Latvia’s regions, says Chief of State Police Ints Ķuzis.

Syrian Kurdish fighters under attack by Turkey announce deal with Syrian government forces

The mainly Kurdish militia in the north-west of Syria have announced having reached an agreement with the Syrian government for the latter to deploy its soldiers in order to help Kurds repel the current Turkish attack.

NCP: it is highly important to replace management of Bank of Latvia and FCMC

Considering recent events, which have not only impacted the country’s finance sector but also its international reputation, the New Conservative Party (NCP) demands immediate measures to be undertaken to replace the management of the Bank of Latvia and the Finance and Capital Market Commission. On top of that, it is also necessary to perform radical changes in the organization and supervision of those institutions, says NCP chairman Jānis Bordāns.

Air temperature in Latvia to gradually decline this week

On Monday, 19 February, atmospheric pressure will increase slightly in the north. With that, it is expected to snow only around Kurzeme’s south-west. Air temperature in most of Latvia will stay at -1° C… -6° C. In Kurzeme, however, air temperature will be around 0° C… +1° C, as reported by State Environment, Geology and Meteorology Centre.