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The National Economy of Latvia ISSN 1407-5334 Latvijas Republikas Latvijas Republikas Centrâlâ THE NATIONAL 3 2012 Ekonomikas ministrija statistikas pârvalde ECONOMY OF LATVIA: (52) A MACROECONOMIC Key indicators of economic development REVIEW Economic policy Macroeconomic development Gross domestic product Development of sectors Manufacturing Investments Foreign trade Balance of payments Prices Monetary indicators Latvia: 2012 Territory, thsd km² 64.6 General government consolidated budget Population as of 01.09.2012. (thsd) 2 032 Personal income of which: Urban area 1 379 Employment and unemployment of which Riga, the capital city 648 Rural area 653 Baltic states National currency: lats (LVL) Key indicators of economic development Economic policy Latvia successfully continues to recover from added tax products and services, as well as to provide Actual data Forecast consequences of the global financial crisis. At the end better paid jobs. In this field, it is important to work of 2011, international loan program has been on development of National industrial policy, which will 2008 2009 2010 2011 2012 2013 successfully completed, thus verifying Latvia's point out the main state support principles for the changes over the previous year, % affiliation to Nordic countries, which has responsible next planning period of structural funds. attitude to public administration and finances. Attraction of investments has been started in a new Gross domestic product -3.3 -17.7 -0.9 5.5 5.0 3.7 Recovery of the economy of Latvia is also recognized quality – the Coordination Council for Large and Consumer prices 15.4 3.5 -1.1 4.4 2.3 2.0 internationally, by international rating agencies, which Strategically Important Investment Projects has been are increasing the Latvia's credit rating, which reduces established and investment attraction strategy Polaris % of GDP both state expenditures for the external debt service has been introduced. The aim of these activities is General government and loan costs for entrepreneurs. active coordination of the work of public and local Working on the state budget project of 2013, first government institutions and non-governmental budget balance -4.2 -9.7 -8.1 -3.4 -1.9 -1.4 time during last 4 years Latvia could afford to increase organizations in order to simplify clarification of any General government debt 19.8 36.7 44.5 42.2 44.5 45.8 the budget expenditures. State budget priorities for emerging issue, facilitate project development and the next year is economic development, improvement ensure timely prevention of problems. Exports-imports balance -13.7 -1.5 -1.4 -4.8 -4.4 -5.0 of demographic situation and increase of wages for At the same time government is implementing a Unemployment rate* 7.5 16.9 18.7 16.2 15.1 13.5 certain categories of employees working in public range of activities in order to eliminate administrative sector. barriers in the areas of tax policy and administration, In 2013, budget deficit has been reduced to 1.4% insolvency process, registration of real estate, tourism, of GDP, also in upcoming years, budget deficit will be construction etc. World bank Doing Business 2013 2010 2011 2012 reduced, thus reaching the balanced budget, latest in index ranks Latvia 25 among 185 countries or II III IV I II III IV I II 2016. In order to establish counter-cyclical and 8 among EU member states. Active work is being sustainable fiscal policy framework, Fiscal Discipline continued to limit the grey economy. The reform of changes over the corresponding period of the previous year, % Law has been submitted to the Saeima. the management of state enterprises is being Gross domestic product -4.0 3.1 2.8 3.6 5.7 6.6 5.7 6.9 5.0 Main tax policy focuses on the reduction of labour implemented. It will ensure transparent and clear taxes. The government has decided to diminish principles for the society as well as potentially higher Consumer prices -2.1 -0.1 1.8 4.0 4.8 4.5 4.2 3.4 2.3 standard rate of personal income tax from 25% to income in the state budget. In Doing Business 2013 % of GDP 20% starting from the January 1, 2013 to December Latvia is included as a good praxis example for 31, 2015. Starting from July 1, 2012, standard rate of improving business environment. Research approves General government value added tax has been diminished by 1% and now that as a result of purposeful action of public budget balance -4.3 -6.5 -16.1 -2.4 2.0 -1.8 -10.6 1.9 3.9 it is 21 percent. administration, during 15 years continuous reform At the moment Latvia is working on introduction cycle has been provided in Latvia, due to which the Exports-imports balance -0.1 -2.6 -2.1 -2.7 -3.4 -6.6 -2.5 -4.9 -4.7 of euro currency. Government has defined the winners are the economy of Latvia and entrepreneurs. Unemployment rate* 19.4 17.9 16.9 17.6 17.1 15.1 15.0 16.3 16.1 provisional euro introduction date – January 1, 2014. Overall reform of energy policy has been launched According to the forecasts, Latvia will be able fulfill – by detailed analysis of the previous implementation Maastricht criteria, which are used to measure the of the energy policy, state support and effectiveness, * share of unemployed persons to the economically active population, aged 15-74, % (as of 2011 data state readiness to join European Monetary Union. new proposal for the further energy policy to 2030 are recalculated on the basis of population census. Recalculations for 2008-2010 data will be available Government policy is aimed to promote long-term has been developed. in the second half of 2013. Until that, as of 2011 data are not comparable with previous periods) development in Latvia, production of higher value- Key indicators of economic development Economic policy Latvia successfully continues to recover from added tax products and services, as well as to provide Actual data Forecast consequences of the global financial crisis. At the end better paid jobs. In this field, it is important to work of 2011, international loan program has been on development of National industrial policy, which will 2008 2009 2010 2011 2012 2013 successfully completed, thus verifying Latvia's point out the main state support principles for the changes over the previous year, % affiliation to Nordic countries, which has responsible next planning period of structural funds. attitude to public administration and finances. Attraction of investments has been started in a new Gross domestic product -3.3 -17.7 -0.9 5.5 5.0 3.7 Recovery of the economy of Latvia is also recognized quality – the Coordination Council for Large and Consumer prices 15.4 3.5 -1.1 4.4 2.3 2.0 internationally, by international rating agencies, which Strategically Important Investment Projects has been are increasing the Latvia's credit rating, which reduces established and investment attraction strategy Polaris % of GDP both state expenditures for the external debt service has been introduced. The aim of these activities is General government and loan costs for entrepreneurs. active coordination of the work of public and local Working on the state budget project of 2013, first government institutions and non-governmental budget balance -4.2 -9.7 -8.1 -3.4 -1.9 -1.4 time during last 4 years Latvia could afford to increase organizations in order to simplify clarification of any General government debt 19.8 36.7 44.5 42.2 44.5 45.8 the budget expenditures. State budget priorities for emerging issue, facilitate project development and the next year is economic development, improvement ensure timely prevention of problems. Exports-imports balance -13.7 -1.5 -1.4 -4.8 -4.4 -5.0 of demographic situation and increase of wages for At the same time government is implementing a Unemployment rate* 7.5 16.9 18.7 16.2 15.1 13.5 certain categories of employees working in public range of activities in order to eliminate administrative sector. barriers in the areas of tax policy and administration, In 2013, budget deficit has been reduced to 1.4% insolvency process, registration of real estate, tourism, of GDP, also in upcoming years, budget deficit will be construction etc. World bank Doing Business 2013 2010 2011 2012 reduced, thus reaching the balanced budget, latest in index ranks Latvia 25 among 185 countries or II III IV I II III IV I II 2016. In order to establish counter-cyclical and 8 among EU member states. Active work is being sustainable fiscal policy framework, Fiscal Discipline continued to limit the grey economy. The reform of changes over the corresponding period of the previous year, % Law has been submitted to the Saeima. the management of state enterprises is being Gross domestic product -4.0 3.1 2.8 3.6 5.7 6.6 5.7 6.9 5.0 Main tax policy focuses on the reduction of labour implemented. It will ensure transparent and clear taxes. The government has decided to diminish principles for the society as well as potentially higher Consumer prices -2.1 -0.1 1.8 4.0 4.8 4.5 4.2 3.4 2.3 standard rate of personal income tax from 25% to income in the state budget. In Doing Business 2013 % of GDP 20% starting from the January 1, 2013 to December Latvia is included as a good praxis example for 31, 2015. Starting from July 1, 2012, standard rate of improving business environment. Research approves General government value added tax has been diminished by 1% and now that as a result of purposeful action of public budget balance -4.3 -6.5 -16.1 -2.4 2.0 -1.8 -10.6 1.9 3.9 it is 21 percent.
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