Last month Iceland's government fell. Interestingly, both nations until recently enjoyed phenomenal growth. When the history of our current economic turmoil is written, will it be said that the nations that soared the highest fell the quickest?
The New York Times describes the wreckage in Latvia:
Gross domestic product shrank at an annual rate of 10.5 percent last month, and by the end of 2009, Latvia's economy is projected to shrink by a shocking 12 percent, Finance Ministry officials say. Other analysts believe that even these figures may be optimistic.
"I wouldn't be surprised if it's 15 percent," Peteris Strautins, chief economist for Swedbank in Riga, said last week.
The crisis led the government last fall to secure an aid package worth nearly $10 billion from the European Union, the International Monetary Fund and other sources. It came with strict conditions, and now the government is cutting spending wherever it can. Hospitals and schools throughout the country are under threat of closing, as local administrations find their budgets reduced by as much as 40 percent. Government salaries have been cut by 25 percent.
Reports from Mrs. Marathon Pundit about the situation in the Baltic state--she is a native of Latvia--have been chilling.
Late last year a Latvian economist was detained by authorities for being too downbeat about the economy.
Related posts:
Latvians: Don't criticize your economy
Latvian economist detained by police for being too pessimistic
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1 comment:
The economy in Latvia will Rebound
faster than U.S. economy. Look who
we have running this country.
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