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Ja Jums Ir Komentāri, Jautājumi Un Ierosinājumi, Lśdzam Tos Adresċt

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Ja Jums Ir Komentāri, Jautājumi Un Ierosinājumi, Lśdzam Tos Adresċt Ministry of Economics Republic of Latvia ECONOMIC DEVELOPMENT OF LATVIA REPORT RIGA DECEMBER 2007 Commentaries, questions or proposals are to be sent to: Ministry of Economics, Republic of Latvia Brīvības ielā 55, Rīga, LV-1519 Phone: 371-67013119 Fax: 371-67280882 E-mail: [email protected] Homepage: http://www.em.gov.lv The Report was prepared by: O.Barānovs (overall compiling, 1., 4.1.1., 4.4., 6.1.), G.Piņķe (3.1., 3.2.1., 3.2.2., 3.3.1., 3.3.2., 3.5., 4.1.2., 4.1.3., 4.3.1., 4.3.2., 5.1.), E.Gergelevičs (2., 3.2.4.), A.Bessonovs (3.2.1., 3.2.2., 3.4.), M.Kubliņš (3.3.1., 3.3.2.), I.Skribāne (3.2.3., 4.3.3., 5.2.), D.Dravnieks (3.3.3., 6.3.2.), J.Salmiņš (4.1.2., 4.1.3.), I.Šnīdere (4.2., 4.3.1., 4.3.2.), Č.Gržibovskis (5.1.), J.Ušpelis (5.3.), I.Šulcs, G.Silovs (6.2.1.), A.Gulbis, D.Klinsone, L.Stauvere, S.Pizika, M.Paņkova, G.Ābele, (6.2.2.), D.Matulis, R.Bērziņš (6.2.3.), T.Grīnfelds, E. Skribnovska (6.3.1.), D.Merirands, D.Eberšteina (6.3.2.), A.Liepa (6.3.3.), A.Andriksone, I.Mežecka, I.Grīnberga (6.3.4.), I.Beināre, I.Benga (6.4.), I.Stikāne, U.Vanaga (6.5.), L.Neiders, I.Eglītis (6.6.), K.Šuste (6.7.), M.Stenders, I.Tarvāne, R.Vīksne (6.8.), M.Purviņa (6.9.), I.Ozoliņa (6.10.), L.Zemīte, B.Vītoliņa (6.11.), R.Ansone, E.Beļskis, J.Maurāns, V.Zvejs (6.12.), D.Jirgena, N.Kovolenko, K.Lore, G.Vigupe (6.13.), I.Lipovska (6.14.), I.Bērziņa (6.14., 6.15.3.) Z.Kubuliņa (6.15.1.), I.Galiņa (6.15.2.). Translated by A.Liepiņš. All the numerical information and data unless otherwise indicated were provided by the Central Statistical Bureau of the Republic of Latvia. Data of the Bank of Latvia and the Financial and Capital Market Commission have been used in characteristics of the Balance of Payments and the banking and monetary indicators of Latvia. The Treasury of the Republic of Latvia data is used in the characteristics of financial indicators of Latvia. Cover design: Ingmārs Usas Printed: SIA „ABC JUMS” Rūpniecības iela 3, Aizkraukle, LV-5101 Phone: 371-65122888, phone/fax: 371-67142383 ISSN 1407-4109 © Ministry of Economics, Republic of Latvia, 2007 Reference mandatory in case of reprinting and quoting. Dear reader, In the Report you will find information both on the development of main economic and social We offer for your attention the 27th Report on indicators, growth of national economy sectors and Economic Development of Latvia prepared by external economic environment, and on the experts of the Ministry of Economics. The first Report government’s economic policy for promotion of was published in September 1994 and the following growth and employment, foreign trade policy, ones since 1995 were published traditionally twice a utilisation of the EU Structural Funds and the year in June and December. The present Report, like Cohesion Fund, innovation and entrepreneurship the previous ones, evaluates the economic situation in policy and other economic reforms. In the conclusion, Latvia and progress of reforms, as well as offers the authors of the Report give recommendations for economic development forecasts. improvement of the national economic policy. Fast economic growth has already been observed The Cabinet of Ministers has not assessed all issues in Latvia for several years. GDP growth was also addressed in the Report, hence many conclusions on considerable in 2007 (according to our estimations – the economic development of the country and by 10.6%). The rapid GDP growth indisputably proposals for further action reflect purely the opinion reduces backwardness of our country from the old EU of experts of the Ministry of Economics. member states. I hope that the Report will be useful to economists We are satisfied with our success, but also are and entrepreneurs and everyone interested in the clearly aware of the existing problems and are issues of the economic development of Latvia and will developing appropriate policies to solve them. Along encourage exchange of opinions between public with the fast growth, economic disproportions institutions, various organisations and interest groups, (essential rise of inflation rate and large current economists and other stakeholders. account deficit of the balance of payments) developed I would like to express my gratitude to the authors and intensified. of the Report. One of the main tasks in 2008 will be improvement of the macroeconomic situation of Latvian economy as fast as possible. The Ministry of Economics in co- December 2007 operation with the Ministry of Finance has worked out several measures for stabilisation of the economic situation for the next 2 years, aimed at promotion of economic growth that will result in stability of national economy in the long term. The priority tasks of the Ministry of Economics in 2008 are as follows: – develop the annual Action Plan for Improvement of Business Environment, including also the measures for reduction of the administrative Kaspars Gerhards burden; Minister of Economics – prepare the Informative Report on Situation in the Labour Market and Medium-Term Forecasts for Conformity of Labour Demand and Supply; – prepare also the Informative Report on Work Efficiency of Representative Offices of the Latvian Investment and Development Agency and Latvian Tourism Development Agency and offer concrete proposals for further development of the network of economic representative offices; – ensure active participation in adoption by the Saeima the draft laws “Amendments to the Competition Law” and “Amendments to the Energy Law”. In order to achieve the set goals, we will continue the dialogue with our social partners (entrepreneurs and non-governmental organisations representing them). This is the only way, how to ensure sustainable growth in the long-term perspective. CONTENTS Abbreviations ..................................................................................................................................................................... 6 1. Economic Situation: Brief Overview .............................................................................................. 8 2. Development of World Economy .................................................................................................... 12 3. Growth and Productivity ................................................................................................................. 15 3.1. GDP Dynamics and Productivity ...................................................................................................................... 15 3.2. GDP Expenditure ................................................................................................................................................. 16 3.2.1. Aggregate Demand .................................................................................................................................... 16 3.2.2. Private and Public Consumption ............................................................................................................ 17 3.2.3. Investment .................................................................................................................................................. 18 3.2.4. Exports and Imports ................................................................................................................................. 21 3.3. Contribution of Sectors ....................................................................................................................................... 25 3.3.1 Structure and Dynamics of the Economy .............................................................................................. 25 3.3.2. Manufacturing ............................................................................................................................................ 26 3.3.3. Energy Sector ............................................................................................................................................. 38 3.4. Development of Regions ..................................................................................................................................... 40 3.5. Forecasts ................................................................................................................................................................. 43 4. Macroeconomic Stability ................................................................................................................. 45 4.1. State Finances ........................................................................................................................................................ 45 4.1.1. Fiscal Policy and Public Debt .................................................................................................................. 45 4.1.2. Budget Revenues ........................................................................................................................................ 49 4.1.3. Budget Expenditures ................................................................................................................................. 54 4.2. Prices ....................................................................................................................................................................... 56 4.2.1. Consumer Prices ........................................................................................................................................ 56 4.2.2. Producer Prices .........................................................................................................................................
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