Few countries have been as badly hit by the global downturn as Latvia.

According to a flash estimate released by the statistical office, the Latvian economy plunged by 18.4% y-o-y during the third quarter, which although below the consensus contraction of 19-20%, was nonetheless a horrific rate of decline. Indeed, this would mark [Read more...]

As the Latvian government proposes a bill to change mortgage regulation to ease the debt burden on households, Bruce Jeffery argues that the country may be one step closer to eventual devaluation of the currency peg.

 

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Having recently returned from a week-long holiday in the Latvian Baltic sea resort of Jurmala, I felt the stark contrast between a wonderful summer holiday destination and the signs of an epic economic crisis. On the one hand I was impressed at the hospitality and pleasantness of this tiny Baltic Sea town, 20km from the [Read more...]

The sharp spike in Latvian interbank lending rates and the sovereign’s credit default protection premium gave a taste of what awaits the country in case of a devaluation, after key economic advisors to the authorities contemplated such a scenario. Justin Patrie discusses the immediate economic implications of a Latvian currency devaluation and what the impact [Read more...]

 

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For several months now, I have run with the view for a devaluation of the Baltic and Bulgarian currencies. The core scenario has always been that such a move would likely not take place until end-2009/early 2010, but today we got a taste of just how acute the risks are of a much quicker and [Read more...]

It’s hard to believe how conditions have changed
CEE, you’re acting a little bit deranged.
Where once there were dreams of economic convergence
We now have nightmares, of defaults and divergence.
As growth turns to slowdown, and slowdown to recession
I hesitate to look forward, for the likely depression.

Ok, enough armchair poetry. Let’s get to the serious stuff. In yet [Read more...]

Three days ago I stressed that the dissolution of Latvia’s four-party coalition government was looking more and more likely. Today, President Valdis Zatlers announced that he has accepted the resignation of the prime minister and his administration. With the economy in turmoil and now lacking a government, Latvia’s ailments are only surpassed by defunct state [Read more...]