Risk to stack in the recession for many years enlarge enforced externals and delay by reforms, however in contradistinction to Portugal Latvia’s plus is higher educated labour.
Economic rate is increasing after joining European Union (EU) after what follow inadequate wage increase for labour productivity. As a result exporters suffer and country loses their positions against Asian producers. Government in place to apply for structural economic reform, increases expenditures: budget deficit, National debt and inflation increase. That is facts about Portugal however for Latvia that is like warning, because now when the growth of gross domestic product (GDP) is almost in the same level and it will be smaller then in Portugal in future. That is risk also for Latvia to stack in the recession for a long time.
[...]
Portugal by their self basically creates Portuguese fundamental economic problems. Those problems are: huge current account deficit, large governmental, household and enterprise debt amount as well as competitiveness disadvantage. In 2007 Portuguese budget deficit was 3% from GDP. This year that could decline till 2,4%. Concerning the growth rates, they are the lowest in EU and even in all Europe – in period from 2004- 2008 the real growth of Portugal GDP has been only 1.4%. By the side Portugal is in better position than Latvia because Portuguese economic problems have internal character and Portugal more or less can control those problems but Latvian economic problems have external character and those are impossible to control.
The main reason for Portuguese sluggish problem is that government did not realize exhaustive and deep structural reforms in time. Has Latvia already have realized them? Certainly NO. Still labour productivity is low, number of employees in state administration does not decrease and there is no mechanism for export support.
Portuguese economical history is similar to Latvia: low credit level, crediting boom, soaring wages, inflation and competitiveness disadvantage. But there is one difference between Portugal and Latvia. Latvia has a greater education rate, which could help country to get out of stagnation faster (if Latvia will decline till that).
Martins Freidenfelds
martking@inbox.lv
Economic rate is increasing after joining European Union (EU) after what follow inadequate wage increase for labour productivity. As a result exporters suffer and country loses their positions against Asian producers. Government in place to apply for structural economic reform, increases expenditures: budget deficit, National debt and inflation increase. That is facts about Portugal however for Latvia that is like warning, because now when the growth of gross domestic product (GDP) is almost in the same level and it will be smaller then in Portugal in future. That is risk also for Latvia to stack in the recession for a long time.
[...]
Portugal by their self basically creates Portuguese fundamental economic problems. Those problems are: huge current account deficit, large governmental, household and enterprise debt amount as well as competitiveness disadvantage. In 2007 Portuguese budget deficit was 3% from GDP. This year that could decline till 2,4%. Concerning the growth rates, they are the lowest in EU and even in all Europe – in period from 2004- 2008 the real growth of Portugal GDP has been only 1.4%. By the side Portugal is in better position than Latvia because Portuguese economic problems have internal character and Portugal more or less can control those problems but Latvian economic problems have external character and those are impossible to control.
The main reason for Portuguese sluggish problem is that government did not realize exhaustive and deep structural reforms in time. Has Latvia already have realized them? Certainly NO. Still labour productivity is low, number of employees in state administration does not decrease and there is no mechanism for export support.
Portuguese economical history is similar to Latvia: low credit level, crediting boom, soaring wages, inflation and competitiveness disadvantage. But there is one difference between Portugal and Latvia. Latvia has a greater education rate, which could help country to get out of stagnation faster (if Latvia will decline till that).
Martins Freidenfelds
martking@inbox.lv
(artigo de opinião)
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