×

Latvian economy grows 0.3 pct in Q1

Latvia's economy, one of Europe's most troubled, grew by 0.3 percent during the first three months of 2010, but is still 6 percent smaller than a year earlier, the country's statistics agency said Monday.

The annual decline, based on a flash estimate, is the lowest since the third quarter in 2008, when the economy contracted 5.2 percent.

The Finance Ministry said the results, along with the announcement that manufacturing picked up 9.6 percent in the first quarter compared with the same period last year, show that Latvia's economy "is slowly recovering from the recession."

After years of excellent growth, Latvia became mired in the worst recession in the European Union. Gross domestic product plunged 18 percent last year — a record for the Baltic country — and unemployment is over 22 percent, according to Eurostat, the EU's statistics agency.

Latvia currently has the highest rate of unemployment in the 27-member EU, with Spain in second place.

In late 2008 Latvia, facing imminent bankruptcy, turned to major creditors such as the EU and the International Monetary Fund for a €7.5 billion ($9.7 billion) bailout package. In exchange the government agreed to implement a number of austerity measures, such as slashing public wages and cutting the size of the bureaucracy.

Latvia's economy is expected to fall between 2 and 4 percent this year and resume moderate growth in 2011.