Current Account Is Main Risk

May 2003
Emerging Europe Monitor: Russia, CIS & Baltics Monitor;May2003, Vol. 7 Issue 5, p11
Country Report
Country Report
In this article the IMF concluded that the principal risk to macroeconomic stability in Latvia is the persistently large current account deficit. The trade deficit has been exacerbated in recent years by weaker external demand for Latvian exports and soaring domestic demand for imports. The forecast of current account deficit of US$ 680mn or 7.6% of GDP in 2003 and US$ 750mn or 7.8% of GDP in 2004. Slightly over 66% of the current account deficit was financed by foreign direct investment (FDI) in 2002. Although the current account deficit moderated slightly in 2002, it remains too high at 8.0% of GDP. The expectation remains from rise in the prices on the basis of a global economic recovery.


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