OREANDA-NEWS. December 11, 2008. The data published specified the decline dynamic of the gross domestic product: during the 3rd quarter the GDP has declined by 4.6% in comparison with corresponding period the previous year. Unfortunately, the rapid decline of added value is experienced by almost all economic sectors. It has to be noted, that positive dynamics was observed in such volatile sectors as fishing and extractive industry, the modest increase was observed in commercial services, reported the press-centre of Latvijas Krajbanka.

Until lately the rapid growth of Latvian economy was furthered by those sectors directed towards consumption, especially trade and civil engineering. There is no surprise that with the change of private consumption and company investment activity for more than 10%, those sectors experienced heavy decline by 8,6% and 7,4% respectively.

Obviously after remarkable increase during the last ten years Latvian economy entered the decrease phase, which is amplified by the unfavourable outside factors. The world’s economy is in the epicentre of the financial crisis, and the economic development of the main Latvian trade partners is showing slowdown signs, moreover – Eurozone and Estonia are showing the decline of GDP. No doubt, that unfavourable situation in European economy and decline of activity in CIS counties diminishes demand after Latvian export goods and services. At the same time the export of goods is still showing positive dynamics.

The processing industry, which ensures the biggest part of Latvian export, shows remarkable decline of production amounts: during the third quarter of 2008 the decline of processing industry comprised 8.9% (in comparison with the corresponding period last year). The heavy decline for more than 10% was observed in manufacturing of timber and wood products and non-metallic mineral articles. It has to be noted that manufacturing of ready-made metal articles is still showing positive dynamics.

The tendencies allow deducing that in 2008 Latvian economy could experience decline for few percentages, in its turn next year the GDP could decline at least for 5%. Unfortunately in the today’s situation when it is not clear how the global financial crisis will develop, how severe the situation in the world’s economy will be, how successfully will proceed Latvian negotiations with the European Committee and IMF, the real digits could turn out to be even worse. A lot depends on how effectively the governments of European countries and ECB will be able to overcome the crisis situation, as well as how heavy decline of economic development tempos will be observed in the CIS courtiers.

We have to note, that in the existing situation it is important to receive loan from IMF and other institutions, no matter how tense the economic stabilization programme and conditions to be fulfilled look like. Although separate decisions are very unpopular and painful, without international financial aid the economic decline could be more dramatic. Today’s hard situation creates good preconditions for the effective development of economy in the long-term perspective.