Latvia’s economic growth could slow down due coronavirus

Latvia’s economic growth will slow down due to the spread of the novel coronavirus Covid-19, Inna Steinbuka, chairperson of the Fiscal Discipline Council, said in an interview with TV3 channel Tuesday.

“Latvia is a part of the world, so we are definitely going to feel the impact from the coronavirus both in direct and indirect ways,” Steinbuka said.

Latvia’s GDP growth forecasts will become more cautious because of threatened consumption. “We projected already in February that the growth will not be fast… The increase was projected at 2.2 percent, but now I would say that it will be around 1.5 percent at best,” Steinbuka said.

The head of the Fiscal Discipline Council noted that the oil price and stocks have been plummeting in the world lately, suggesting that investors are not expecting any significant consumption. This can affect the Latvian economy as well, although the strength of the impact is hard to predict at this stage, Steinbuka said.

“I do not want to scare people, because prices fluctuate at all times – we need to look at the prices not in daily or weekly terms but at least over a year,” said Steinbuka.

She said that the coronavirus is expected to bring losses to sectors like hotels, passenger carriers and airlines, including Latvia’s national carrier airBaltic.

The Fiscal Discipline Council is scheduled to meet this Thursday to discuss the situation.

At the same time, Steinbuka cited a Singaporean researcher’s opinion that for a small economy like Latvia it is much easier to fight both the impact from the virus and related panic.

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