Latvia saw its economy shrink 4.6 percent in 2008, the worst performance since 1995, after a jolt downwards of more than 10 percent in the final three months of 2008, data showed on Wednesday. The incoming prime minister said the economy might drop more than the forecast 12 percent this year, while the head of the statistics office said the first months of 2009 looked bleak.
Economists saw a drop in output for 2009 of anywhere between 15 and 20 percent. In 2007, the economy grew 10 percent due to a consumer boom, but this hit a wall during the credit crunch. The latest figures confirmed the extent of the economic slowdown that has hit the once-booming European Union nation, which last year had to take a 7.5 billion euro IMF-led financial rescue and which is expecting a 12 percent GDP drop this year.
He has formed a new government and expects a vote of confidence in parliament on Thursday. Showing the tough task awaiting him, the statistics office, which had earlier estimated the GDP drop in the last three months of 2008 at 10.5 percent year-on-year, said revised calculations showed a slightly smaller drop of 10.3 percent.
"By information we have so far in the first months this year, the situation is very negative. We have to wait and see what will happen to our finances and our tax revenues," said Aija Zigure, statistics office chairwoman. "Its dark but not totally black," she told a news conference.
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