It will take two years for Latvia’s economy to recover, said the newly elected member of the council of the Bank of Latvia Andris Vilks on October 5.
“We should have had a V-type development. This means a relatively deep and quick fall and a very fast recovery. It would have happened, but what we see now is that the second wave of COVID-19 has hit other regions harder than we have expected. Because of external facts we could see delays with consumption and investments again. We may also see smaller export volumes,” said Vilks.
He said thereby there might be a U-type development observed in Latvia and all other Baltic economies, which meant economic recovery within approximately two years.
“The development model will not be V-type, but it will be U-type for all Baltic States, since we will need approximately two years, not one, to recover. This is the only relatively good scenario, because there will be regions in which this recovery will take a significantly longer period of time,” said Vilks.
He also said Latvia had been very fiscally responsible after the last crisis and had been too careful with expenditures in this crisis.
“The chosen direction is correct, but volumes are incorrect. Latvia has diverted a smaller amount of available money towards businessmen and residents to overcome consequences from the crisis. There could have been bigger volumes – the amount could have been corrected twice,” said Vilks.
He mentioned that Latvia was headed generally in the right direction, but the question was about support amounts and the speed of their provision.
“Latvia’s problem is slowness. Latvia’s problem is indecisiveness. This was said to me by colleagues from many countries. We have very good ideas and very clever people, but we are too uncertain,” said Vilks. (BNN/Business World Magazine)