Economics Ministry says GDP will shrink at least 1.2% due to coronavirus

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Uncertainty and disruption caused by the novel coronavirus will cause Latvia's GDP to shrink at least 1.2% this year, according to Economics Ministry estimates.

But other experts are wary to name any figure, saying there's still too much uncertainty over the virus. Among them is Toms Rostovskis, the president of the Chamber of Commerce and Industry. He told Latvian Radio's Krustpunktā March 19 that it's certain the Latvian economy would shrink this year but that it's too early to name a figure.

His opinion was mirrored by Swedbank representative Jānis Paiders. "It's difficult to tell. I don't want to name a figure at this time," he said.

Meanwhile Raimonds Aleksejenko, deputy State Secretary at the Economics Ministry, said that the economy will shrink at least 1.2% on year in 2020, and the figure could increase if the present disease crisis becomes protracted. 

Toms Rostovskis stressed that at the moment there should be state support for all, not just the hardest-hit industries, because almost everyone will be affected by the crisis. He said that the biggest problem for businesses right now are related to cash flow. 

On March 17 Latvia announced crisis measures to support businesses during the coronavirus outbreak. 

The state says it will cover costs associated with sick leaves and, in some industries, employees will be compensated for downtime for up to 75% of their monthly wage with payouts capped at €700 per month. Companies in hardest-hit industries will likewise be offered tax holidays, as well as loans and loan guarantees.

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