Economy & Politics: The consequences of the corona crisis for the Latvian economy and its employees

Last Updated on 2020-05-09 by Birk Karsten Ecke

In a virtual press conference on April 22, 2020, Kaspars Rozkalns, the head of the Latvian State Investment and Development Agency LIIA, made the statement that the corona crisis will reduce exports of the small European country by 20 to 30 percent compared to to last year. At the same conference, Latvian Minister of Economy Janis Vitenbergs predicted an overall economic recession of about 8 percent. Logically, the tourism sector and automotive suppliers are particularly affected by the global economic development.


Image: The SWEDBANK tower at the left bank of the Daugava river in Rīga. Image created in December 2013. Click on the image to enlarge it.

Image: The SWEDBANK tower at the left bank of the Daugava river in Rīga.
Image created in December 2013.
Click on the image to enlarge it.


Latvia is a country that is dependent on tourism. Guests from Germany, Great Britain, the Scandinavian countries, the Baltic States and especially Russia love this beautiful country with its architecture, the nature and of course the possibility to have party until sunrise in Rīga. However, these guests stay away because Latvia is almost hermetically sealed off from foreigners. The number of overnight stays decreased dramatically in March by more than 70 percent. A lot of hotels are closed until end of June 2020. The construction, pharmaceutical and digital service providers are almost unaffected. But that’s no difference to most European countries.

The corona crisis can certainly be compared to the worst global economic recession since the Great Depression of the late 1920s and 1930s, and it is sure to be mentioned in the history books of future generations. Both Rozkalns and Vitenbergs are proposing government investments to save the Latvian economy from ruin. It is not yet clear what this aid looks like. Investments in infrastructure and environmental protection are conceivable. The plans to support employees are somewhat more specific.

The state pays a downtime allowance in the amount of 75 percent of the salary received so far, but not more than the amount of 700 euros per calendar month. The minimum payment is 130.- € as well as 50.- € for each dependent child for whom personal income tax relief has been applied. Until 19th of April, the average amount of benefit paid to the self-employed was 232.70 €. The maximum amount of the benefit, 700.- €, was received by 59 self-employed persons, but the benefit paid to 790 people or 79 percent of the self-employed did not exceed the minimum wage or 430.- €.

Latvia is not the country where you can live as cheaply as many think outside. At least in supermarkets, groceries are more expensive in terms of income or at least not that much cheaper than in Germany. In any case, one cannot live from the amounts paid, because the purchase of groceries and renting an apartment or maintaining a house cannot be financed by it.


External Links:

Wirtschaft & Politik: Welche Auswirkungen CORONA auf die deutsche Wirtschaft hat – Eine Zwischenbilanz nach 6 Wochen Lockdown


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