Currencies Direct: Latvia and the Euro, a Marriage Made in Heaven?
LONDON, September 28, 2012 /PRNewswire/ –
Austerity has saved Latvia from the pitfalls of recession and boosted
economic growth, but is all that good work about to come undone?
At a time when Europe’s monetary union is beset by threats of default and a possible
break-up, Latvia, a small Baltic state in north-eastern Europe, plans to adopt the euro in
2014. But why? Why should a state which according to the IMF has shown healthy signs of
economic growth since the world financial crisis in 2008 even consider entering the
troubled eurozone? Currency exchange [http://www.currenciesdirect.com ] experts Currencies
Direct explore the possible reasons for Latvia’s insistence on joining the eurozone party.
Under one of the harshest austerity regimes in Europe, Latvia has bounced back from
recession to become one of the fastest-growing economies in the European Union. The IMF
report that output reached GBP26.4 billion in 2011; a sum lauded by both EU and IMF
bigwigs. Yet wouldn’t adopting the euro unravel all that good work? After all, with a
population of just 2.2 million, couldn’t Latvia simply end up like Cyprus, a eurozone
member buckling under the weight of debt and of comparative size to Latvia’s economy?
Not according to Prime Minister Valdis Dombrovskis. He believes eurozone inclusion
offers the Latvian economy increased financial stability and a level playing field to
compete on foreign exchange
[http://www.currenciesdirect.com/info-centre/currency-converter ] markets and to trade with
the rest of Europe. Speaking in the Economist, Mr Dombrovskis says Latvia’s geographic
position with neighbouring Baltic States Estonia and Lithuania, and economic powerhouses
Germany and Poland, should benefit the country’s export-lead trade, especially as Northern
eurozone members are faring a lot better during the eurozone crisis than those in the
He even goes so far as to confess that Latvia’s bouncebackability stems from the
promise of eurozone membership in 2014; preparing for monetary union by employing strict
austerity measures, which were previously implemented with efficient speed and ruthless
efficiency – unlike Greece.
Yet suggesting Latvia hasn’t been affected by these measures and the eurozone’s
economic travails would be spurious to say the least. Unemployment remains high, so much
so that emigration has now become a major issue for the government. Seemingly internal
de-valuation, which proposes steep cuts in wages and prices, has taken its toll, forcing
many to look abroad for a living.
The idea of the euro as a financial haven may seem laughable, especially as European
leaders continue to preside over its future, but for Latvia and its government inclusion
in the euro-bubble’s ascent seems too promising to burst.
About Currencies Direct
Currencies Direct is one of Europe’s leading non-bank providers of currency exchange
payment services. Since its formation in 1996 Currencies Direct has evolved and positioned
from being an innovative service provider of foreign exchange for consumers and
high-net-worth individuals into a dynamic and pioneering ‘business-to-business’,
fully-integrated treasury solution service provider.
Headquartered in the City of London (United Kingdom) with operations in Europe,
Africa, Asia and the United States, Currencies Direct is part of the Azibo Group, a
privately owned investment company.
SOURCE Currencies Direct