Analytics, Baltic States – CIS, Economics, EU – Baltic States, Latvia, Transport

“One the one hand, growth is always a good thing of course - it means more money, higher income, more money in the budget, but on the other hand, let’s not forget that last year, the year that Latvia did not receive European funding, its growth rate was 2 percent or the same as in the rest of Europe, and this is a reason for serious thinking,” Dombrovskis said.

The head of the think tank said that the income gap causes many people to leave Latvia and that the number of emigrants is still higher than the number of immigrants.

“Consequently, the conclusion is quite simple - the only way to seriously curb [emigration]… would be by achieving faster income growth here than in Europe. So, if our growth is the same as Europe’s people will keep leaving. If we are to stop emigration and promote remigration, we need a growth rate that would be significantly higher than Europe’s average. This is absolutely possible, but on the condition, that we make the economy the top-priority, which is not the case at the moment,” Dombrovskis said.

He also said that Latvia’s GDP growth target of 3 percent for 2018 is achievable as EU funding flowing into the economy again.

Asked about the impact of the decrease in Russian cargos on the Latvian economy, Dombrovskis said it could depend on which scenario will come true. If the cargo traffic from Russia stops altogether, the effect on the economy might reach an estimated 4-5 percent of GDP.

“In comparison with Lithuania and Estonia, which have their domestic cargos, our railway’s dependence on transit cargos from the East is much bigger, so we either have to invite the Lithuanians who are very good at dismantling rail tracks or we have to spend huge subsidies on the maintenance of the railway like all other European countries,” Dombrovskis said.

Certus was holding its annual forum in the central Latvian town of Malpils. This year’s the forum focused on the Latvian economy’s strategic growth directions.