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Thursday, July 26, 2007

Latvian External Trade

I am going to track the monthly changes in the Latvian trade balance to get some idea where we are going. There is not too much to read into what we see below, except, of course, that imports are still running at a lot higher level than exports.

However, for the Latvian government strategy to be successful, both in containing the internal demand and maintaining economic growth, we should see imports come down and exports go shooting up. This has to be the objective, although without devaluation I simply can't see how they are going to do it. Still, lets wait and see.

Source Latvijas Statistika (and here)


Aleks said...

Oh-uh, you used the naughty D-word. Our government is trying to keep it hush-hush, although I've heard banking experts now recommending to keep one's savings in other currencies.

Edward Hugh said...

Hi Aleks,

"Oh-uh, you used the naughty D-word"

Yep, well all of this could well become a problem. I mean look at the extent of the deficit. Obviously a large flow of inward remittances cover a multitude of problems, but not all of them. And these stoke up domestic demand, which is the root of the problem in the first place, given the labour supply constraint.

What I think is important is that we report all of this as accurately as we can, but that we try to avoid feeding rumours, which can become many and plentiful, I'm afraid.