Kazāks: Economic recession expected in Latvia in winter

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The Latvian economy has already begun to slow down. The winter will be difficult economically and a recession is expected, but the fall in GDP will not be very deep, Latvian central bank governor Mārtiņš Kazāks said on Latvian Television September 23. 

Kazāks said that the main reason for the slowdown of Latvia's economy is the energy sector. For that reason, winter will be rather tough. The Latvian economy is expected to be in recession, but the economic contraction will not be very deep. Kazāks added that the fall will not be similar to the situation during the economic crisis more than a decade ago.

The main problem is that there is not only one shock to the economy in this situation, but because of the Russian invasion of Ukraine, the shocks have come one after another. It is currently estimated that due to economic slowdown, the time around the new year will be "rather painful". But toward spring and early summer, the economy should start to recover, Kazāks said.

Asked about the possibility of company bankruptcies, the President of the Bank of Latvia said that such risks are always present and that when the economy slows down, there will be companies that will have a rough time.

Therefore, the government's decisions to support the public and entrepreneurs in the rise of energy prices were correct, he said. At the same time, Kazāks said the extent of the aid provided by the State should be calculated in order not to further stimulate inflation.

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