Recession worsens as top banker quits in Latvia

Aug 10, 2009, 11:08 GMT

Riga - The economic situation in Latvia worsened Monday with fresh data released showing a deepening recession and the sudden resignation of one of the country's most respected bankers.

Figures from the national statistics office showed the economy contracted 19.6 per cent in the second quarter compared to the same period last year.

The Latvian economy contracted by an annual 18 per cent during the first quarter of 2009.

'The decline of economic development continued both in manufacturing and services. Major volume decreases were observed in retail by 28 per cent, in hotels and restaurants services by 35 per cent, and in industry by 19 per cent,' the office statement said.

Other data showed year-on-year inflation dropped from 3.4 per cent in June to 2.5 per cent in July. Month-on-month, prices actually fell by 0.6 per cent.

Inflation peaked at 17.7 per cent as recently as May 2008.

Foreign trade was down by 35.5 per cent or 351.0 million lats (710 million dollars) year-on-year.

Even while financial analysts were digesting the data, Inesis Feiferis, chairman of the state-owned Hipoteku un Zemes Banka, announced his resignation after 12 years in the job.

Speaking to journalists at the Finance Ministry, Feiferis said that with his 60th birthday approaching he had decided to refocus his energies.

'The time has come to change my life,' he said.

Feiferis is a widely respected figure on the Baltic financial scene, and played a key role in saving Latvia's Parex Banka from total collapse last year.

Rolands Panko was announced as Feiferis' replacement.