10 December 2008

Latvia and Sweden

The situation in once fast-growing Baltic tigers is dire. As the Economist writes, the third quarter of 2008 was marked by a 4.2% contraction in economic activity and unemployment reached the level of 7.2%. The country had to face problems in its banking sector - Parex Bank, the second largest financial institution in Latvia, had to be nationalised after clients escaped to secure subsidiaries of Scandinavian banks. Latvia's plans of accession to the Eurozone complicate the situation even more, as the local currency, lat, is pegged to euro and the central bank has had to defend the fixed exchange rate recently.

Next year the economic slowdown will most likely deepen. The positive point is the IMF help package, which is nevertheless linked to austerity measures.

Going further, the situation in Latvia is bad, but also interesting from an economic point of view - it even led to the creation of a specialised blog: http://latviaeconomy.blogspot.com/.

Nevertheless, probably the most bizarre phenomenon is the initiative of young Latvian students. As Gazeta.pl (a major Polish web portal) wrote, a group of them decided to mock government actions and formulated a petition in which they request Sweden to take over Latvia (!).

The petition can be found here.

Although the petition is a clear joke with political undertones, it is true that Sweden experienced a financial crisis at the turn of the 1990s. And yes: some compare today's global crisis to the Swedish experience.

Is there, nonetheless, any lesson from the Swedish crisis for Latvia?

4 comments:

bathmate mateus said...

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Bathmate

bathmate mateus said...

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Bathmate

CrisisMaven said...

I think the former Swedish and today's experience are not really comparable - there's an order of magnitude between them, whith all states concerned completely overstretched and therefore facing bankruptcy.

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