Latviski English По-русски
Friday 14.12.2018 | Name days: Gaisma, Auseklis

Expert: residents’ purchasing power – with a stable plus sign

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvia’s economic growth in recent years has had an effect not only on the capital but also residents’ purchasing power. Local businesses’ economic activity gas increased in regions and other cities in Latvia.

Purchasing power is higher in large cities. Nevertheless, economic growth is felt everywhere in Latvia. Norvik Banka’s Kurzeme region office manager Agnese Čerņevska details the differences between businesses in the capital and regions.

Loans usually taken for marriage, travel and car purchase

Demand for loan services increases along with continued improvement of the economic situation in the country. «Demand and purchasing power differ for regions and small cities. Demand is high for mortgage loans and different kinds of leasing. Fast loans are usually taken for marriage, travel and major purchases. Car purchase is one of the most common reasons why residents turn to banks for financial support,» says the expert.

Women pay more attention to interest rate

Data from Norvik Bank show that the main criterion for residents when they pick loan service providers is interest rate in 62% of cases. «It is interesting that when picking a service provider, women pay more attention to the interest rate (67% of women and 58% of men). The survey shows that residents take the least amount of time – up to one week – to use fast loan services for unexpected life situations, such as car repairs or medical services (36%). Respondents admitted taking the longest time to consider fast loan services for education (17%), house repairs (15%), and car purchase (14%). In such cases residents take up to three months and more to make their decision,» says Čerņevska.

Fast loans – a problem in regions

The expert also mentions that when it comes to loans and residents’ economic activity, the fast loan matter cannot go unmentioned. «The negative effect fast loans have on residents’ purchasing power and the need to resolve this problem has been in banks’ sight for some time. The problem is very common in regions. Working with clients who turned to us with complaint about consequences caused by fast loans, we have noticed that often people become desperate that this problem is impossible to resolve. In such cases the bank provides free financial consultations. There is always a way to resolve financial problems. Norvik Bank has a large number of clients that have turned to us for merging fast loans. There are cases when clients had very high interest rate for their loan – up to 80%. As a bank, we are able to refinance commitments starting from 12%. This allows clients to divert their remaining funds to their needs. This also helps improve the client’s purchasing power.»

Inability to assess insolvency

«People are not always able to assess their financial capabilities. In many cases, fast loans are more easily acquired than bank services. Banks always strictly evaluate their clients’ solvency, put up specific guidelines and conditions. The bank is always open to cooperation – we are interested in the client’s ability to pay back their loan. We explain to our clients that risks should be taken into account when planning finances. People have to know how to think in advance, because risks always exist, including the risk of losing a job. Will the client be able to survive for three months with only savings until they find a new job? Do they consider the possibility of their new wage being below their last one, which may affect their ability to cover debts,» says Čerņevska.

Rational thinking required for financial matters

Norvik Bank Kurzeme region office manager says the times when banks were considered a threat should be left in the past. «Or way of thinking needs to change: banks are cooperation partners that can help residents discuss and resolve problems. Lack of knowledge causes many wrong opinions to form. Banks are interested in cooperating with their clients, and they value their ability to pay back loans. In affairs associated with money, we recommend residents to thing rationally, not emotionally. People’s opinions are worth knowing. Still, it is also important to be certain of your own opinion. Fake news have a major negative impact on formation of people’s news, especially if a large number of residents believe it. We often forget to assess information before accepting it as is and sharing with others.»

Economy grows +4.2% annually

Statistical data for last year shows a promising trend – Latvia’s economy is on a rise. Growth was observed in all industries last year. In 2017 Latvia’s economy experienced the most rapid growth in the last six years – GDP growth was 4.5%. Exports showed excellent contribution. Investment activity recovered as well. Household consumption grew more rapidly. General economic growth also affected residents’ purchasing power and economic activity, the expert said.

Businesses become more active; foundation of new companies slower

Čerņevska notes that this has been an active period for entrepreneurship. «The number of economically active businesses has been increasing steadily in the past five years, forming 14% growth. This growth will continue this year, as well. Especially rapid growth has been noticed in construction and processing industries. In spite of good economic development, the number of newly-founded companies has declined. If we look at 2017, the number of newly-founded companies has declined by 8.89%. Still, existing companies remain economically active and stable.»

Leave a reply

Experts: fiscal consolidation is unavoidable next year

The new government will have to perform fiscal consolidation when compiling the state budget for 2019. This opinion was sent to the Saeima and Cabinet of Ministers by the Fiscal Discipline Council in relation to the 13th Saeima’s approval of amendments for the Healthcare Law that provide for a 20% wage increase for doctors starting next.

Ventspils opposition: the Constitution stands above municipality’s opinions on city governance

«For us to work to our full capacity, we require information and stay in the loop. If the work of the city council was organized during meetings of the city council and committees, we would have this opportunity. But because the work of the city council is put under other institutions – committees, in this case – and we [majority of opposition deputies] are not allowed to participate in those meetings and receive documents, this means our rights as deputies and voters are being limited. This, we believe, is the most important aspect to be breached,» said Ventspils City Council opposition deputy Aivis Landmanis said during a hearing of the Administrative Court in Liepaja in regards to Ventspils City Council’s refusal to adopt proportionality principles in committees and other structures.

EU offers Britons clarification, but no renegotiation of Brexit deal

European Union member state leaders and the blocs top officials have stated at a summit with British Prime Minister Theresa May, that the Brexit withdrawal agreement that lacks clear support in UK parliament was not open for renegotiation.

Estonia raises minimum wage

The minimum monthly wage in Estonia has been approved at the level of 540 euros, which is an increase from 500 euros.

This year e-signature was used to sign more than 5.7 million documents in Latvia

This year, e-signature was used more than half a million times a month in Latvia. A total of 5.7 million documents have been signed using this function in Latvia so far. More than 25,000 now use e-signature function on their smart-phones.

Trump distances himself from crimes committed by his lawyer

Reacting to the conviction of American lawyer Michael Cohen over campaign funding violations, U.S. President Donald Trump has distanced himself from the lawyer and accused him of attempts to embarrass Trump.

New Unity starts consultations with parties on forming government with Kariņš in charge

New Unity will insist on getting Finance Ministry in the new government, because it is only logical to have this ministry managed by the prime minister’s party, says NU representative and Saeima deputy Ojārs Ēriks Kalniņš.

Strasbourg terrorist «neutralised» after opening fire on police

The attacker suspected of killing two people and injuring 12 more people at a Strasbourg Christmas market has been shot dead by French police.

Next week in Latvia to start off with snowfall

The end of the week is not expected to have any major weather changes in Latvia, whereas next week will start off with snowfall and gradual decline of air temperature, promises Latvian Environment, Geology and Meteorology Centre.

Court arrests Harmony sponsor and Honour to Serve Riga party member

Riga City Vidzeme District Court issued an arrest to businessman Aleksandrs Krjačeks on Thurday, 13 December. He was previously detained by Corruption Prevention and Combating Bureau in the criminal case regarding procurements organized by SIA Rīgas satiksme, as confirmed by the man’s lawyer Valdis Ulmanis.

Saeima: increase of doctors’ wages should be a government priority

When preparing the budget plan for the next three years, the government should allocate money for the 20% increase of doctors’ wages. This is provided by changes to Healthcare Financing Law, approved by the Saeima in two readings on Thursday, 13 December.

airBaltic to perform more flights between Riga and Liepaja

During a visit today in Liepaja CEO of Latvian airline airBaltic Martin Gauss announced that airBaltic will increase the number of domestic flights between Riga and Liepaja from three to five weekly as of summer season 2019.

Court arrests Škoda commercial director; CPCB request arrests for two more people

Latvian court has arrested Škoda commercial director Vladislav Kozak following a request from Corruption Prevention and Combating Bureau in relation to the criminal case regarding procurements performed by Rīgas satiksme.

EY: investments in crypto currency offers have largely failed

86% of 141 initial crypto currency offers presented last year have lost value over the course of the first eight months of this year. Additionally 30% of them have lost nearly all of their value, according to Initial Coin Offerings study by EY.

Estonian criminal figure convicted in Ireland

A court in Ireland has convicted Estonian criminal figure Imre Arakas, finding him guilting of conspiracy to murder.

As income increase, housing becomes more accessible in all Baltic capitals

Housing Accessibility Index improved in all Baltic capitals in Q3 2018. The main factor for this was the growth of average net salaries. Additionally, beneficial economic development also improved households’ interest for housing acquisition, which was reflected both in increased activity on the apartment market and household loan portfolio growth.

Lithuanian PM suspects Kremlin-backed opposition behind teacher attacks

The nearer municipal council, presidential and EP elections, the more sparkles Lithuania’s political leadership spews out. With the linguistic weaponry exhausted in the Seimas, the party leaders seek help from intelligence services.

EP proposes stricter monitoring of militants returning to Europe to combat terrorism better

The European Parliament has presented proposals for better measures against radicalization, better data exchange and support of victims of terrorism, as well as several other proposals for European Union’s strategy for terrorism prevention.

Latvian media organizations found Media Ethics Council

On Wednesday, 12 December, Latvian Media Ethics Council was founded. It is a public organization meant to unite media organizations and legal persons associated with the media sector and supervise compliance with the council’s statutes and code of ethics, the council explains.

U.S. President's former lawyer sentenced to prison

The former personal attorney of U.S. President Donald Trump has been handed a prison sentence for violations of the rules of election campaign. A New York court has sentenced Michael Cohen to three years in federal prison.

Latvian parties hear New Unity leader’s offer; opinions on coalition still differ

Political parties in Latvia are prepared to listen to New Unity and its prime minister candidate Krišjāņis Kariņš’s initiative in the government formation process.

British PM stays after no-confidence vote, attends EU summit

British Prime Minister Theresa May has survived a no-confidence vote in her ruling Conservative Party and on Thursday attends a summit of the European Union.

European Parliament ratifies EU-Japan Economic Partnership Agreement

On Wednesday, 12 December, gave green light for EU-Japan Economic Partnership Agreement, which is EU’s all-time largest mutual trade agreement.

Businessman Māris Martinsons brought to court. What will the court decide?

Businessman Māris Martinsons has been brought to testify in court. As it is known, he was detained by Corruption Prevention and Combating Bureau on 11 December.

Employers become more open to 3rd level pension contributions

Employers in Latvia have begun making more active contributions to 3rd level pension plans. Residents’ interest towards crating pension savings continues growing, too. Compared to the period of last year, the size of contributions to private pension funds has increased 10% in the first nine months of 2018.