Economy

Economy—overview: In 1997 Latvia scored the most impressive economic achievements since independence in 1991 with GDP growing by 6% and inflation at 7.4%. GDP is expected to grow 5% in 1998 and inflation to range between 6% and 7%. In 1997 Latvia continued its strict fiscal policy and apparently ended the year with a small fiscal surplus reflecting higher-than-expected income from customs revenues excise and business taxes and restraints on government spending. Foreign direct investment (FDI) in 1997 was a record $880 million by yearend. Prospects for increasing FDI in 1998 are good if Latvia privatizes at least some of its large companies including Venspils Nafta (the state oil company). Although Latvia was disappointed that it was not included among the five Central and East European states invited to start EU accession talks in spring 1998 it is likely to join the WTrO in 1998. Latvia's growing current account and trade deficits remain a cause for concern reaching nearly 10% by yearend. Latvia's trade deficit may even reach 22% of GDP in 1998.

GDP: purchasing power parity—$2554.4 billion (1997 est.)

GDP—real growth rate: 6% (1997 est.)

GDP—per capita: purchasing power parity—$4 260 (1997 est.)

GDP—composition by sector:

agriculture: 9%

industry: 34%

services: 57% (1995)

Inflation rate—consumer price index: 7.4% (1997 est.)

Labor force:

total: 1.4 million (1997)

by occupation: industry 41% agriculture and forestry 16% services 43% (1990)

Unemployment rate: 7% (1996)

Budget:

revenues: $NA

expenditures: $NA including capital expenditures of $NA

Industries: buses vans street and railroad cars synthetic fibers agricultural machinery fertilizers washing machines radios electronics pharmaceuticals processed foods textiles; dependent on imports for energy raw materials and intermediate products

Industrial production growth rate: 2% (1996 est.)

Electricity—capacity: 2.035 million kW (1995)

Electricity—production: 4.095 billion kWh (1995)

Electricity—consumption per capita: 2 300 kWh (1995)

Agriculture—products: grain sugar beets potatoes vegetables; meat milk eggs; fish

Exports:

total value: $1.4 billion (f.o.b. 1996)

commodities: wood and wood products textiles foodstuffs

partners: Russia other CIS Germany Sweden UK

Imports:

total value: $2.3 billion (c.i.f. 1996)

commodities: fuels machinery and equipment chemicals

partners: Russia other CIS Germany Sweden UK Finland

Debt—external: $NA

Economic aid:

recipient: ODA $122 million (1993)

note: commitments from the West and international institutions $525 million (1992-95)

Currency: 1 Latvian lat (LVL) = 100 santims; introduced NA March 1993

Exchange rates: lats (LVL) per US$1—0.595 (January 1998) 0.581 (1997) 0.551 (1996) 0.528 (1995) 0.560 (1994) 0.675 (1993)

Fiscal year: calendar year