Latvia is the global trading hub of the European Union

Latvia is the global trading hub of the European Union

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History of Latvia

Latvia is one of the most culturally diverse countries in the Baltic Sea, as well as having a range of different landscapes from wide beaches to forests and even modern cities. Its capital, Riga, the European Capital of Culture 2014, is known for its museums, churches, architecture and for maintaining the Old Town and Central Market with its medieval days feeling. It has an essence that awes visitors when they go in the hopes of discovering places like the Gauja River Valley, the Valgums Lake and of course the Baltic Sea. In fact, it is covered 56% by forests making it the 5th highest proportion of land covered by forests in the EU with 3,947,000 ha (a,640,000 acres). They also offer a variety of leisure activities like biking, hiking, cruising, boating, diving, besides holding festivals and events such as the Positivus and the Latvian Song and Dance Festival. It borders with Belarus, Estonia, Lithuania and Russia by land, and with Sweden by sea.

It was established in 1918 as a democratic parliamentary republic. Its official language is Latvian and is a unitary state with 118 administrative divisions, of which 109 are municipalities and 9 are cities. After going through some political turmoil, they ended a transitional period and restored complete independence on August 21, 1991. This came as a direct result of a failed Soviet coup attempt.

In the late 2000s, Latvia experienced economic instability due to various unexpected occurrences such as the greatest rise in unemployment in the EU in 2010, with a 22.5%, ahead of Spain which has been at 19.7% in that year. Even the Nobel Laureate in economics for 2008, Paul Krugman, expresses in his Op-Ed column in the New York Times on December 15, 2008 that “the most acute problems are on Europe’s periphery, where many smaller economies are experiencing crises strongly reminiscent of past crises in Latin America and Asia: Latvia is the new Argentina ” The turn of the decade would bring about many changes for Latvia with a clear stabilization in their economy and decrease of unemployment rated of about 9.3 in 2012. After being in the red, Latvia was now out of debt and has only continued to improve as confirmed by the IMF in 2012.

Image courtesy of Staffan Vilcans at Flickr.com
Image courtesy of Staffan Vilcans at Flickr.com

 

Current economy

Today, the transport sector makes up at least 14% of the GDP with its transit from Russia, Belarus, Kazakhstan and other Asian countries. Latvia has three main ports where most of the transit traffic goes through: Riga, Ventspils, and Liepāja. Considering that crude oil and oil are the products that are transported the most, Latvia has assured a completely interconnected transportation grid that allows it to import and export this and many other goods. These ports, especially one, are not only important to Latvia, but to the EU. For instance, the Free Port of Ventspils is the busiest port in the Baltic Seas. Besides the port, the road and railways connections make it interconnected to oil extraction fields and direct routes to the Russian Federation via two pipelines from Polotsk, Belarus. The Riga International Airport is the busiest one from all the Baltic states, with more than 4.7 million passengers passing through in 2012. It has direct flights to more than 30 countries with at least 80 destinations.

Latvia besides transport, also has other industries such as hydroelectric power stations. In the recent years Latvia has built nearly a dozen wind farms, biogas and biomass power stations. It also has the only underground gas storage facilities in the Baltic states and the largest one in Europe.

Exports and imports of Latvia

Latvia’s geographical location makes it a natural hub for global trade. It has easily become the most favored country to trade from, due to its central position and this results in strong trading relationships with Germany and other EU giants. Latvia has a natural resource that makes for an obvious dominating export, which is timber and wooden products. Now, this isn’t to say that they do not also stand out for other products such as chocolates, telecommunications products, locomotives, tram cars and dairy products.  On the other hand, the top imports are refined petroleum, petroleum gas, packaged medicaments, cars and broadcasting equipment.

In terms of exports, the tops destinations are Lithuania with around $2.08 billion, followed by Russia, Estonia, Germany and the United Kingdom. As for imports the top origins are Germany with $88.8 billion, China with $55.8 billion, the Netherlands with $52.1 billion, France with $39 billion and the United States with $37.8 billion.

In the past year, even though the imports of some products have decreased such as textile and textile articles, followed by transport vehicles and equipment; some have increased like chemical and allied industries. All in all, Latvia’s imports and exports will seemingly only continue to grow due to its key location in Europe.

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