"We can look at the recovery not only in Latvia, but also in our major export markets, not only in the European Union, but also in the United States and Asia, which managed to save nearly three trillion dollars during the pandemic. In the eurozone, savings have increased by nearly €390 billion. This means that the situation is improving, but there is also a negative side effect – as soon as there is faster demand, supply is not able to follow suit so quickly and there is a rise in prices," the economist said.
Andris Bite, Chairman of the board of the fish processing and canning plant Karavela, estimates that demand for fish production doubled in 2020, when the Covid-19 pandemic started. Then the company's turnover increased by 24%. Demand has now returned to levels in 2019.
“We have a broad assortment, starting with local sprat and herring, ending with tuna and salmon from Alaska and mackerel from Iceland. Fish prices are rising, but price increases are reasonable because they have been slowed down by quota increases. There are many fish in the ocean and it stalled a huge rise in prices. But, let's say, for metal, price rises are close to 100%, for aluminum the same, so it impacts the end price. The biggest problems are not high prices, but the fact that it is growing very rapidly and cannot be quickly offset by the increase in sales prices,” Bite said. The Karavela company exports canned fish to 46 countries around the world.
Economist Priede said that Latvian entrepreneurs have been able to adapt quickly to the demand in the world, which has changed due to the pandemic.
"In the construction market, the [demand] is for a variety of types of materials—wood, metal. The pandemic has boosted demand for pharmaceutical products, and Latvia is also showing good results. Every situation, whether positive or negative, has some potential and is being exploited successfully by our entrepreneurs. But in general, much depends on how we will do with fighting the pandemic, because tourism has still not really recovered, there are restrictions on travel. I think there is still a lot that depends on how everyone will cope with this pandemic," said Priede.
Bite said that entrepreneurs were already accustomed to fluctuations in raw material prices. The business environment in Latvia is a concern: high labor taxes, a mandatory procurement component and thus high electricity prices, which undermine companies' competitiveness not only in Europe but also in the Baltic, according to the entrepreneur.