Poor but stable, Latvia looks set to join the club

Published on 5 June 2013 at 13:32

The European Commission has further cleared the way for Latvia’s accession to the Eurozone. In a document published on June 5, it reports that the country "has achieved a high degree of sustainable economic convergence with the euro area.” It now rests with the Eurogroup ministers to give the country the final green light to become part of the currency bloc on January 1, 2014.

Latvia "fulfils all the criteria needed to adopt the euro," and "has made ​​the necessary legislative changes required to adopt the euro," says Diena. The Latvian daily adds that –

The average year on year inflation rate in Latvia in April was 1.3 per cent, which is well below the required 2.7 per cent level. [...] The budget deficit fell to 1.2 per cent of GDP in 2012 and is expected to be 1.2 per cent of GDP in 2013. [...] Public debt dropped to 40.7 per cent of GDP in 2012 and is expected to hit 40.1 per cent in 2014.

However, with a GDP per capita of $14,800 (€11,327), "the country is one of the poorest in the EU," notes Der Standard. But

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experts in Brussels are focusing on the strong psychological and political signal that is sent out through the accession of a country that finds itself in such an [economic] situation. Since each member country is represented equally with a seat and a vote [in the Eurogroup], the culture of stability demanded by the northern countries is reinforced.

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