ALL THREE BALTIC TIGERS have taken giant leaps but is has come at a cost. This is most obvious in Latvia, where big increases in salaries and prices generated inflation pressure (the rate has passed 16 percent). Domestic consumption is peaking partly because of generous credit policies. The result is a limping trade balance and Latvian politicians and business men are frequently using the expression export promotion.
EVER SINCE THE SINGING revolution, Latvia has got used to upsetting changes in a fast pace. This dynamic has turned Latvia into an attractive country in many ways – lots of opportunities and great openness to the unknown. In the beginning of the 90s - when the time of change started – there were great hopes and dreams. For individuals it was mostly about a house, a car, a good salary and wealth. Nationally it was about a Latvia shaped and perfected into a welfare state. Today, houses and cars are almost every man’s property although most of it is on credit. Salaries are high but so are the prices.
DESPITE A LOT OF COMMENTARIES about the country’s negative economic outlook, these gloomy predictions have not yet materialized. The currency has not been allowed to fluctuate and there is speculation about how to fight inflation. Ever since they entered the EU, the Latvian government has channelled EU fund capital through specialised public support programs. During 2007-2013, money is being distributed to innovations and further training of personnel. The goal is to develop from an economy with heavy export of raw material to exporting value added goods. The EU funds are available to each registered company in the country irrespective of investment origin.
THE TEXTILE BUSINESS, traditionally very strong in Latvia, is a good restructuring example. Today, there is hardly any cultivation or production of linen fabric left and many sewing companies, flourishing in the 90’s, have closed down for good. They are working on other solutions and are launching a new technical textile as an engineering tradition. The conception is to combine it with textile knowledge to find new products to specialise in.
Austra Kreslina