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Saturday 16.12.2017 | Name days: Alvīne

Forbes: Austere Baltic states outgrow their European neighbors

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Latvian Prime Minister Valdis Dubrovskis, Estonian Prime Minister Andrus Ansip and Lithuanian Prime Minister Andrius Kubilius

Latvian Prime Minister Valdis Dubrovskis, Estonian Prime Minister Andrus Ansip and Lithuanian Prime Minister Andrius Kubilius

The Eurozone crisis continues, like the rerun of a bad soap opera.  The only constants are bail-outs and rosy scenarios.  Maybe Greece will hang onto the Euro at the cost of its economy.  Maybe Italy will find political stability through another election.  Maybe Great Britain won’t leave the European Union.  Maybe Germany will bail out all of its profligate neighbors—forever.

And maybe Latvia will join the Euro.

The latter suggests rats racing aboard a sinking ship.  Questions about the judgment of Prime Minister Valdis Dombrovskis aside, however, his determination to have Riga join the currency union reflects his nation’s surprisingly strong economic performance, writes Forbes. GDP growth in 2012 hit five percent and, reported the Wall Street Journal:  “Latvia plans to pay off loans from the International Monetary Fund and the European Commission by 2014.”

Also highly rated are the fellow Baltic States of Estonia and Lithuania.  All three faced enormous economic difficulties just a couple of years ago but, noted Anders Aslund of the Peterson Institute for International Economics, “Crisis resolution in these countries was decisive and successful.”

In short, at a time when the question seems to be which European nation won’t require a bail-out, the Baltic Three have demonstrated the art of economic reform.  Fiscal prudence delivers economic growth.  This experience offers a reform model for the rest of the continent and beyond.

The Baltic States demonstrate that someone in Europe is doing something right.  Observed Anders Aslund:  “Amid the carnage of the European financial crisis, the Baltic countries, by and large, are doing quite well.  Estonia, Latvia, and Lithuania are booming.  In 2011, their growth rates reached 7.6 percent, 5.5 percent, and 5.9 percent, respectively.  The turnaround, driven largely by manufacturing exports, has been one of the most remarkable and promising stories of the crisis.”

This experience offers obvious lessons for the rest of Europe. Forbes has expressed them in the following way:

1.Don’t run up big debts.

2.Don’t engage in an orgy of “stimulus” spending.

3.Make tough decisions early.

4.Maintain fiscal responsibility.

5.Emphasize budget cuts.

6.Finally, don’t rest on one’s laurels.

There is no painless way out of economic and financial crisis.  But the experiences of Estonia, Latvia, and Lithuania demonstrate that there are solutions, Forbes emphasize.

Ref.110.110.110.3944


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