Central Bank reassures on sanctions impact

Russia's dramatic ban on food imports from the West will have an effect on the Latvian economy but not a dramatic one, Latvian central bank economist Andris Strazds said on LTV Thursday night.

"We could say that it will not affect the whole forest but it could have an impact on some of the individual trees," Strazds said.

"There could of course be problems in certain sectors or companies very specifically focused on the Russian market... but in the broader economy as a whole the Russian import ban doesn't mean too much," he said.

In Strazds' view the ongoing conflict between Ukraine and Russia has already impacted the Latvian  economy and caused growth forecasts to be reined in from 5 to 3 percent for the year, but the sanctions announced by Russia in response to earlier Western sanctions will not have a significant additional impact.  

He also warned that use of European Union funds to prop up industries particularly hard-hit by the sanctions should only be used with caution.

"We have to be careful with calls to create such funds because in the end we could end up paying in more than we get out."

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