The 2008–2009 Latvian financial crisis, part of the global financial crisis of 2008–2009, is a major ongoing economic and political crisis in Latvia. In 2008, after years of booming economic success, the Latvian economy took one of the sharpest downturns in the world, picking up pace in the last quarter which saw GDP contract by 10.5%.[1] On January 13, 2009, Latvia saw its worst riots since the collapse of the Soviet Union after more than 10,000 people took to protest in the capital, Riga, over the governments handling of the crisis.[2] In February the Latvian government asked the International Monetary Fund and the European Union for an emergency bailout loan of 7.5 billion Euros, while at the same time the government nationalized Parex Bank, the country's second largest bank. On concerns of bankruptcy, Standard & Poors subsequently downgraded Latvia's credit rating to non-investment grade BB+, or "junk", its worst ever rating. Its rating was put on negative outlook, which indicates a possible further cut.[3] On February 20 the Latvian coalition government headed by Prime Minister Ivars Godmanis collapsed.[4]
The Baltic States have been amongst the worst hit by the global financial crisis. As of April 2009, Latvian unemployment was at 16.8%, up from 7% in December 2008.[5][6] The number of unemployed has more than tripled since the onset of the crisis, giving Latvia the highest rate of unemployment growth in the EU. Early year estimates predicted that the economy would contract by around 12% in 2009.[7] But even those gloomy forecasts may be too optimistic, given that Latvian economy shrank 18% in the first three months of 2009, the biggest fall in the European Union.[8][9]. However, the decrease in GDP in partly due to economic activity going into the informal sector.
See also
- Economy of Latvia
- Global financial crisis of 2008–2009
- 2008–2009 Russian financial crisis
- 2008–2009 Icelandic financial crisis
- List of bankrupt or acquired banks during the financial crisis of 2007–2008
References
- ^ Latvia's economy shrinks rapidly BBC Retrieved on February 27, 2009
- ^ Latvia Is Shaken by Riots Over Its Weak Economy New York Times Retrieved on February 27, 2009
- ^ Latvia’s Credit Risk Rises to Record on Bankruptcy Concern Bloomberg L.P. Retrieved on February 27, 2009
- ^ Latvia's government resigns amid economic crisis The Huffington Post Retrieved on February 27, 2009
- ^ Increases in unemployment in Baltic States were highest in EU in April y-o-y Retrieved on June 3, 2009
- ^ Unemployment rate in Latvia reached 9.5% in February The Baltic Course Retrieved on March 05, 2009
- ^ Europe's sickest country CBC Retrieved on February 27, 2009
- ^ http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ao7qqF0UESqc
- ^ http://news.bbc.co.uk/2/hi/business/8043972.stm
External links
- Latvia Economy Watch
- The IMF's Stand-by Arrangements and the Economic Downturn in Eastern Europe: The Cases of Hungary, Latvia, and Ukraine, September 2009, report from the Center for Economic and Policy Research
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