Latvian prime minister predicts 3 per cent growth in 2011

Dec 28, 2010, 15:26 GMT

Riga - Prime Minister Valdis Dombrovskis predicted Tuesday that Latvia's economy would expand by 3 per cent in 2011, following what is likely to be a stagnant 2010.

'This year has seen us stabilize the economy,' Dombrovskis told reporters.

He admitted that Latvia's gross domestic product (GDP) for 2010 would probably finish at the same level as 2009, showing neither growth nor contraction.

Dombrovskis, who won parliamentary elections in October despite introducing some of the toughest austerity measures seen worldwide, said that his government had managed to change Latvia's 'economic structure' by increasing efficiency and controlling the state budget deficit.

Growth would likely return in 2011 and reach 3 per cent for the year, he said.

The Latvian economy shrank by 18 per cent in 2009 as the country struggled to meet the terms of a 7.5-billion-euro (10-billion-dollar) bailout loan from the European Union, the International Monetary Fund and other international lenders.

Dombrovskis has won widespread praise among his EU counterparts for his successful implementation of cost-cutting measures that have involved raising taxes, reducing benefits and closing schools and hospitals.

He refused to confirm on Tuesday reports that further hospital closures in rural areas are being planned, but did say the government would continue to consider the future sale of state assets, including telecoms companies Lattelecom and LMT.