Latvia

RGE's Q1 2010 Latvia Outlook

After soaring double-digit growth rates earlier this decade, Latvia now holds the dubious honor of being the EU’s fastest-shrinking economy, with an estimated GDP contraction of 18% in 2009. Once an investor darling, Latvia experienced massive capital inflows earlier this decade, which fueled economic overheating. The drying-up of capital inflows and anemic external demand, triggered by the global crisis, highlighted Latvia’s vulnerabilities and pushed the economy into a severe recession.

The coming year does not seem likely to hold much cheer for Latvia. The outlook for domestic demand remains dismal, though exports are starting to show signs of life. There are a number of risks to the base-case scenario. Latvia continues to struggle to...

Read the Q1 2010 Latvia Outlook.