bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Tuesday 17.10.2017 | Name days: Karīna, Gaits
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

Ašeradens to leave Latvian government at the end of November

Latvian Economy Minister Arvils Ašeradens intends to leave the government after approval of the 2018 budget in the Saeima, which is scheduled for the end of November, as confirmed by Prime Minister Māris Kučinskis.

Islamic extremists blamed for tragic terrorist attack in Somalia

The death-toll in a tragic terror attack in the eastern African state of Somalia has reached 320 people and local authorities have stated that a key member of the cell that allegedly launched the attack on Mogadishu has told them that al-Shabaab was responsible for the crime.

Rīgas namu pārvaldnieks gets new management

From now on Rīgas namu pārvaldnieks will have a new chairman: once the head of Latio Namsaimnieks has been appointed as the new head of the company. The other vacant post has been given to Ardis Pāvilsons.

Catalonia misses ultimatum deadline, Spanish government vows to act after Thursday

The separatist Spainish region of Catalonia has missed the deadline to clarify, if it has declared independence and Madrid has received a letter from the President of the autonomous region, which still needs analysis.

What will be the consequences for companies that cheated with electricity production permits

Businesses that were caught using fake permits for electricity production in mandatory procurements will not have their permits extended, says Latvian Economy Minister Arvils Ašeradens.

Latvian tourist accommodation facilities experience increase of overnight guests

The number of nights tourists and other guests spent in Latvian hotels and other tourist accommodation facilities in the first eight months of 2018 has grown 12.2% in comparison with the same period of last year, reaching 3.524 million.

Antāne: transit industry has been on thin ice lately

«The transit industry has been on thin ice lately. Russia’s decision to divert all cargoes to its ports will only smash the ice. The government and state policy-makers have two choices – wait for the ice to break completely and watch the industry drown until finally stepping in, or act now to at least reduce the crisis for the country’s national economy, workers and their families,» says President of Baltic Association – Transit and Logistics Inga Antāne.

Kučinskis evasive in evaluation of Unity’s Economy Minister candidates

Latvian Prime Minister Māris Kučinskis remains evasive when it comes to assessing Unity’s Economy Minister candidates.

Amid alleged harassment scandal, Rõivas leaves post in Riigikogu

The former head of Estonian government Taavi Rõivas, who has been pointed to as allegedly having groped a woman during a visit to Singapore, has denied the claims, but has nevertheless decided to leave the of the second deputy speaker of the Estonian parliament.

De Facto: only one person was convicted of corruption in politics by KNAB in 15 years

In the past fifteen years, Corruption Prevention and Combating Bureau completed only one political corruption case, as concluded by De Facto programme of LTV.

Centre party victorious in Estonian local government elections

In the Estonian municipal election, held on October 15, the largest overall support has been won by Centre Party that is also the ruling party in Estonian central government.

Week to kick off warm in Latvia; weather to become colder down the line

At the beginning of the week, several cyclones will pass over Scandinavia. Cyclones will also dictate weather in Latvia. Atmospheric fronts will pass over the country multiple times throughout the week. Nevertheless, the sun will appear every now and then, as reported by State Environment, Geology and Meteorology Centre.

CEO of Samsung Electronics resigns, citing unprecedented difficulties

At the world's second largest electronics firm Samsung Electronics, its co-chief executive officer Kwon Oh-hyun has stepped down, pointing to management problems in the massive South Korean company.

Accreditation fees for sign language interpreter programmes may be reduced in Latvia

Latvian Welfare Ministry intends to work with Education and Science Ministry to find a solution for the situation with accreditation fees in the existing sign language interpreter programme, as reported by Welfare Ministry’s representative Aiga Ozoliņa.

Austrian government expected to be headed by 31-year old Kurz

In the Austrian parliamentary election, held on Sunday, October 15, victory is projected to the right-wing Austrian People's Party and its leader Sebastian Kurz could be become Europe's youngest head of government.

Week in Lithuania. Lithuania buying Norwegian air defence systems

Lithuanian defence officials have announced intention to buy Norwegian medium-range air-defence systems NASAMS in hopes of patching one of the biggest defence gaps.

Dryer and warmer weather expected

This weekend and next week, dryer and warmer weather is expected in Latvia, according to forecasts by the Latvian Environment, Geology and Meteorology Centre.

Orkla Foods Latvija invests 122 000 euros in new production line and design

Juice and sauce producer Orkla Foods Latvija owned by the Norwegian conglomerate Orkla Group is investing 122 000 euros in a new production line and in the development of new product packaging design.

Return to military conscription discussed in Latvia

The restoration of mandatory military service would need three preconditions – the need expressed by the military, political will and public support, evaluated Latvian Defence Ministry State Secretary Jānis Garisons at an academic discussion on the necessity to restore conscription.

London housing rent prices have risen sharply to low-income renters, study finds

UK low-income renters currently on average pay 28% of their monthly income on housing rent, which is a considerable increase from 21% in the mid-1990s, researchers have found.

Italian court: sick pay applies to woman, who cared for her ill dog

A woman in Italy has won a trial on right to receive sick pay for being absent from work to care for her dog after surgery.

Passenger trains in Latvia to have wireless internet

Wireless internet is to available in all passenger trains in Latvia operated by the state-owner railway passenger carrier Pasažieru vilciens.

With central banks keeping mum, talks of RE bubble deemed unfounded

The Baltics‘ real estate market remains bubbly and robust, but the exuberance the market shows seems worrisome to some. Yet the majority points to the Baltic central banks. Unless they send a message of distress, followed with the tightening of lending, there’s nothing to worry about.

Poll: Ethnic minorities feeling closer to Latvia, express limited support on NATO

The majority ethnic minority residents in Latvia feel a deep or a very deep sense of belonging to the country in 2017, which is an increase by 4% since last year and a 16%-increase since 2015, showed results of opinion polls by the Latvian Ministry of Culture.

Latvian Economy Minister to leave post

The Latvian Minister of Economics, Deputy Prime Minister Arvils Ašeradens has decided to leave the post in the government and assume the mandate of a member of the Saeima so he could chair the parliamentary faction of his party Unity.

Newest comments