"Economists Association 2010" Winter Conference

At its annual winter conference, the "Economists Association 2010" members discussed the 2010 GDP forecasts and predicted -5% GDP decrease.

Export market growth, decline in domestic consumption, the situation in the labor market and macroeconomic predictability are the key factors that were the most frequently mentioned among members predicting forecasts for next year.

The greatest concern is the employment problem and the growing social discontent. Citizens, who lose their jobs, leave the country, or set up microenterprises. Unfortunately the start-ups lack on working capital just like the others. Growing labor taxes are anchoring entrepreneurship’s development. However the departing people should consider whether it is really easier to launch production abroad than in Latvia. This raises hope that people may soon start to return.

Threatening factor for the Latvian economics are the upcoming elections. "This is an inadequate time for election and it will affect next year’s decisions, but primarily the long-term national development", said president of the association Ojars Kehris. At the same time, there is a positive trend. The public is more aware of the economic processes. "People have realized that the feast can’t last forever. The stocks are rising; people have begun to think how to provide themselves in the long term." The economist Peter Strautiņš also sees positive changes in people's thinking: "It must be understood that Latvian economics is more diverse and developed, then in Greece." He added that in many places the "problem-solving year" is already behind and there is greater interest in different sector development options.

The situation at the global financial markets also raises concerns. Kaspars Gerhards and Martins Bondars believe that it is too early to talk about the so-called world's leading economy recovery, which of course, also affects Latvia. Noting the Latvian export growth, the economists suggested that in spring many foreign investors will look for opportunities for attractive investments, particularly from Russia.

This year will be crucial for long-term development of Latvia and predictability in this situation would let to expect macroeconomic stability.