Analytics, Economics, GDP, Latvia

Andris Vilks.

Altogether this year, Latvia's GDP could fall 14% to 17%.

Vilks expects that the ongoing structural reforms will continue smoothly until August or September, when cardinal changes will have to be made in the budget.

"A large part of the budget is untouchable, but possibly it will have to be reduced. This could only be done though if it is clear that the economic growth will resume in a year's time," stressed Vilks.

Yet much more important is to consider ways to increase budget revenue, so that amending the budget is not necessary. "After money is received from the International Monetary Fund, approximately EUR 1 billion could be used for stabilization of the economy in order to generate revenue," said Vilks.

As reported, Prime Minister Valdis Dombrovskis (New Era) said that there are indications that the Latvian economy has reached the bottom. It means that the economic downturn will come to an end, and the economic development in Latvia could resume in the second half of 2010, said the premier.

According to the Central Statistical Bureau's preliminary data, Latvia's GDP fell 18% in the first quarter of the year.