Central bank drops GDP forecast, calls for 'structural reform' debate

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Latvian central bank governor Ilmārs Rimšēvičs said Friday the bank was revising its growth prediction for the year down to 2.8% from 2.9% as well as dropping a few hints to the government that the figures on which their 2015 draft budget is based could do with another look.

Speaking to journalists at the Bank's headquarters in Riga, Rimšēvičs said: "September's prognosis was for GDP growth of 2.9% this year but we have now slightly revised that downwards to 2.8%."

Next year should see GDP growth of "roughly 2.7%" he added while adding that the central bank predicted inflation of 1.4% next year - significantly below the 2.4% level on which the budget will be based.

The budget "could be a little too optimistic," Rimšēvičs said, noting that local government budgets in particular generally turned out slightly worse than expected.

This year has not been easy, it has been quite difficult, but Latvia's economy remains one of the fastest-growing in Europe."

Rimšēvičs, who has held his position since 2001, also used the occasion to call for a wider debate about precisely what is meant by the frequently-heard buzzwords "structural reform".

"Structural reforms are increasingly important - they will play a crucial role in ensuring the welfare of the population," he said, using a graphic of a pot plant on top of a three-legged stool to support his point.

Rimšēvičs took the opportunity to congratulate Lithuania on its imminent accession to the eurozone too, saying the creation of a "unified market" in the three Baltic states should make the region more attractive to investors.

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