He acknowledged that in the industries most affected by COVID-19, including aviation and hotel industry, revenue declines are so significant that “there is no further fall.” However, the economy as a whole is adjusting to the circumstances of the COVID-19 crisis, including working remotely as far as possible.
According to Strazds, the worst in Latvia's economy is over. This year, it is forecast that Latvia's gross domestic product (GDP) will shrink by around 5% compared to the previous year's GDP.
“There should be a slight increase next year compared to the low levels of this year,” said the economist.
The extent of GDP growth next year, compared to 2020, will depend on whether we will experience a third outbreak of COVID-19 in the spring. The economy will grow next year, compared to this year's low level, but will not yet reach the 2019 GDP level. This is likely to happen in 2022, Strazds estimated.
He said that in those countries where different restrictions are imposed, there is also a smaller drop in the economy. In the event that the government decides to declare a state of emergency and additional restrictions, aid to businesses should be provided. “Limits should come with support measures,” Strazds added.