...First, weaker external demand from Russia, and to a lesser extend international sanctions, are dampening overall Latvian export volumes. ...There is a strong, cross-party consensus on conservative fiscal policy and debt management, and we do not expect to see a significant increase in government spending for the foreseeable future. Although Prime Minister Laimdota Straujuma has resigned following infighting within the centre-right coalition, the current coali- tion of the Unity party, the National Alliance and the Union of Greens and Farmers will likely remain in government, meaning that fresh elections will probably not be necessary. As a result, we do not expect a significant deviation in fiscal policy. ...Although Prime Minister Laimdota Straujuma has resigned following infighting within the centre-right coalition, the current coali- tion of the Unity party, the National Alliance and the Union of Greens and Farmers will likely remain in government, meaning that fresh elections will probably not be necessary. As a result, we do not expect a significant deviation in fiscal policy.
...---- ----e ----f ----f ----f ----f ----f ----f ----f ----f ----f ----f Private final consumption, EURbn --.- --.- --.- --.- --.- --.- --.- --.- --.- --.- --.- --.- Private final consumption, of GDP --.- --.- --.- --.- --.- --.- --.- --.- --.- --.- --.- --.- Private final consumption, real growth y-o-y -.- -.- -.- -.- -.- -.- -.- -.- -.- -.- -.- -.- e/f = BMI estimate/forecast. Source: BMI, Latvia Statistics via s demographics pose to the medium-term growth outlook, and see a greater-than-not probability that the country will fall into the middle-income trap. ...Source: BMI, Latvia Statistics via s demographics pose to the medium-term growth outlook, and see a greater-than-not probability that the country will fall into the middle-income trap. The country suffers from among the worst population projections in the EMEA region, as low birth rates have been compounded by high levels of net migration, primarily from the young, working age segment of the population seeking employment abroad. The reason that Latvia s poor demographics are so dangerous for medium-term growth is quite simple. ...This implies that the working-age population will have to increase productivity at an exceptionally strong rate if the country is to maintain positive real GDP growth rates. The unemployment rate in Latvia is approaching its pre-crisis level, and although this has been heavily driven by high levels of emigration, this means that -- Business Monitor International Ltd www.bmiresearch.com
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