Dombrovskis: Economic indicators suggest recession in Latvia is over

The recession in Latvia is over, Prime Minister Valdis Dombrovskis told an Aug. 9 press conference in Rīga called to discuss the latest economic indicators.

The announcement comes less than two months ahead of the Oct. 2 parliamentary election, in which the prime minister’s centrist Vienotība alliance is vying for control of the Saeima against the center-left Harmony Centre.

“The recession is over and on the basis of certain indicators it can be expected that in the second part of the year Latvia’s economy will regain growth in terms of both quarterly and annual indicators,” Dombrovskis said during the press conference, according to his press secretary. “This means a more positive gross domestic product, tax income, employment and other rates.”

Economists say a recession is over when the gross domestic product increases for two consecutive quarters, the prime minister’s office noted.

Statistics cited by Dombrovskis and Economic Minister Artis Kampars included:

  • The GDP grew 0.3 percent in the first three months of this year and 0.1 percent in the second quarter. Dombrovskis and Kampars noted that while the level of growth is small, it cannot be disregarded after Latvia’s heavy economic downturn.
  • Industrial production in the second quarter increased 6 percent compared to the first quarter.
  • Retail production was up 1.7 percent in the second quarter.
  • Unemployment is down and price indices are up.

The prime minister’s office acknowledged that “a small economic downturn still remains,” but added that the numbers compare favorably to the 18 percent drop in the GDP last year.

A Bank of Latvia economics expert suggested that the GDP could turn positive during the third or fourth quarter of this year.

“Several factors are still at play, however, which make us expect an uneven development and remain cautious regarding GDP forecasts for the subsequent quarters,” Igors Kasjanovs said in a commentary posted Aug. 9 on the Bank of Latvia’s website. “The near future developments and risks most important for the Latvian economy are the imminent parliament elections, the adoption of the 2011 state budget and the related undertakings as well as a possibly weaker growth of the European economy at the end of the year and in 2011.”

However, Kasjanovs cautioned that “GDP growth in one or two quarters in itself is no guarantee that the growth will continue in the subsequent quarters.” He noted that both Estonia and Lithuania experienced recent bumps after seeing their economies begin to rebound.

Andris Straumanis is a special correspondent for and a co-founder of Latvians Online. From 2000–2012 he was editor of the website.

Run-up to October’s Saeima election features alliances, conflicts

With less than two months before the Oct. 2 Saeima election, Latvian politics is emerging from the respite of a warm summer. All lists of party candidates have now been finalised and some clear battle lines for the election have been drawn.

This election will be unusually decisive in Latvian politics, for two reasons. First, we have the strong showing of the Russia-leaning Harmony Centre (Saskaņas centrs), which is the ruling party in Rīga now and which threatens to dominate in the new Saeima, potentially for the first time bringing a basically non-Latvian party into government. The strength of this party, which has led all opinion polls for several months, is the newest element in the political mix that has also brought about realignments in other parties.

Secondly, the poor fortunes of two previously leading parties—the People’s Party (Tautas partija) and the First Party of Latvia (Latvijas Pirmā partija), widely seen as responsible for the economic mismanagement that led the country to its present financial woes—have brought them together in a new formation, For a Good Latvia! (Par Labu Latviju!, or PLL), in a desperate attempt to survive with any deputies at all in the next Saeima.

This alliance also reflects a wider move to forming alliances among Latvian parties. Three centre-right parties have joined together to form Unity (Vienotība), whose Valdis Dombrovskis is the current prime minister. The two nationalist parties, the veteran For Fatherland and Freedom (Tevzemei un Brīvībai / LNNK) and the very active new radical right party All for Latvia (Visu Latvijai), have also formed an alliance.

Traditionally, Latvian parties have always split and fragmented among themselves, but some of these alliances and reformulations bring new calculations.

Most significant is the need to form the PLL alliance. It is significant in that this is an alliance of two leading oligarchs—Ainārs Šlesers and Andris Šķēle—implicated completely in Latvia’s economic decline, but now artfully trying to hoodwink the public into believing that they are the solution, not the problem. They have formed an alliance publicised as AŠ2, which has however been widely parodied and ridiculed. The alliance is determined to wrest power back from its reviled Vienotība. To regain power, the alliance is happy to think of a coalition with Harmony Centre. The alliance is also best chums with the quietest party in Latvian politics at the moment, the Union of Greens and Farmers (Zaļo un Zemnieku savienība, or ZZS), whose butter-wouldn’t-melt-in-my-mouth stance disguises its close allegiance to Latvia’s other significant oligarch, Ventspils mayor Aivars Lembergs, and seeming willingness to be in coalition with anyone.

All these parties would love to get the upper hand over Vienotība, which despite its own political problems has been the most outspoken against corruption and favouring of oligarch interests. Yet with the radical shifts of party fortunes, particuarly PLL, pre-election calculations are still quite uncertian.

July polling results

Just how difficult it is to gauge the likely outcome is shown in a recent poll giving the July party ratings. A rather bold headline in the Aug. 7 edition of Diena announced it is likely that six parties will gain seats in the Saeima, headed by Harmony Centre with a whopping 30.2 percent of the vote. It was followed at some distance by the alliance Vienotība with 22.1 percent, the Green and Farmers at 20.1 percent, with a gap to the nationalist alliance All for Latvia and For Fatherland and Freedom at 7.1 percent. Two parties just scraped by with 6 percent of the vote: the PLL alliance and the Soviet remnant For Human Rights in a United Latvia (Par cilvēka tiesībām vienotā Latvijā, or PCTVL).

This would seem to signal triumph for Harmony Centre, and an easy coalition with their mates in PLL and ZZS at least. But looking more closely at the figures, we see some of Latvia’s political peculiarity. In actual voter responses, some 40 percent of those surveyed in this poll did not express a preference (21.5 percent of respondents said they had not made up their mind, while 18.5 percent announced they would not participate in the elections at all). Actual votes showed Harmony Centre at 18.1 percent, while PLL was at 3.8 percent and PCTVL at 3.6 percent, below the 5 percent necessary to get into the Saeima.

The figures above were got by extrapolating that all those undecided would split proportionally to those already decided. Yet other research has shown that there is a far greater number of those “undecided” among the Latvian electorate than the Russian. Those committed to Harmony Centre and PCTVL are more firmly established in their preferences. Just how the swinging Latvian voters will split between the various parties is anyone’s guess—the campaign still matters.

An opinion among many commenators has been that the forces behind the previous failed government that brought Latvia to the brink of financial crisis—particularly in the PLL alliance—will once again use their considerable publicity machinery to run a saturation campaign just before the elections, as they so successfully did in 2006.

Perhaps to forestall this, Vienotība, a party considered rather naïve in political tactics, took an initiative that promises some significant returns, but also brings its own dangers. It has launched a public campaign for voters to say who they would rather have as prime minister, Dombrovskis or Harmony Centre candidate Jānis Urbanovičs. This is a direct play on fears that the Russian-oriented Harmony Centre will become the biggest party in the new Saeima, and a call for Latvian voters to rally. Urbanovičs has become an odious figure in Latvian politics, with repeated pro-Russian and anti-Latvia statements, urging Latvia to assume pro-Moscow stances in trade and international affairs, and taking some of his opponents to court for suggesting he is anti-Latvia. No doubt the fear of this party coming to power has influenced Vienotība in this action, but it has also perhaps given Urbanovičs a deal of publicity he may otherwise not have got.

Understandably, other parties see this as an entirely presumptive move, as they also have candidates for prime minister, and in a politics of coalitions no candidate can presently be certain of office. Most ominously, however, PLL has not yet nominated a prime ministerial candidate. In a typical head-kicking statement, joint PLL leader Šlesers dismissed Vienotība’s survey as an indulgence, for on Aug. 12 PLL will announce who will be Latvia’s next prime minister! He announced a massive campaign would bring success to his alliance at the elections.

This brings us to an exquisite moment in politics. At present, the Saeima as constituted with a large PLL contingent has been quite capable of undermining Dombrovskis’ government, for example, by scandalously not reappointing Chief Prosecutor Jānis Maizītis, or delaying other needed legislation. But on Oct, 2, this same PLL will be fighting for its very existence as a parliamentary presence. If PLL does get in, has it already made a behind-the-scenes deal concerning the next goverment? The next two months will be exceedingly intense.

Album memorializes Līvi vocalist Grodums

An album in memory of Jānis Grodums, one of the founding members of the legendary Latvian guitar rock band Līvi, has been released just weeks after his death. Grodums, 52, died June 15.

The album, Nezāles neiznīkst, features 19 tracks of studio and live performances by Līvi in which Grodums sings the vocal solo, recording company MICREC announced in a July 27 press release. Grodums was known for his dzelzs rīkle, or iron throat.

The idea for the album came from Grodums’ mother, Ausma, who saw it as a way to memorialize someone who had inspired an entire generation, according to MICREC.

The Liepāja-based Līvi was formed in 1976, although the band’s ancestry can be traced to 1972, according to its website www.livi.lv. Original members of Līvi included Grodums (bass and vocals), Juris Pavītols (guitar and vocals), Ēriks Ķiģelis (guitar and vocals), Ingrīda Pavītola (voice) and Andris Krūziņš (percussion).

Grodums, suffering from hepatitis, died two days before a concert in downtown Rīga that was meant to raise funds for his treatment. Instead, the concert turned into a memorial event featuring a number of well-known Latvian performers and an audience numbering in the thousands. A memorial also was held in Liepāja.

The songs on the album include:

  • Bailes par ziņģi (1997)
  • Ziņģe par bailēm (1997)
  • Sesku dāle (1997)
  • Līviskā ziņģe (1986)
  • Rožu laukums (1986)
  • Dzejnieks (1988)
  • Piedod man (1997)
  • Zvani (1988)
  • Nekad (1998)
  • Kad saule riet (Saules ceļš) (1988)
  • Dieva dēls (2000)
  • Mana vienīgā ziņģe (1997)
  • Ej, vecais, ej (2004)
  • Zelta sirds (1996)
  • Ozolam (1987)
  • Ja man miljons būtu (1979)
  • Lakstu gailis (live) (1994)
  • Pārāk maz (live) (1988)
  • Dzimtā valoda (1986)

Most of the songs on the album were penned by Grodums. Others were composed by Ķiģelis, Ainars Virga, Guntars Mucenieks, Mārtiņš Brauns and Juris Kulakovs.

Nezāles neiznīkst

The album Nezāles neiznīkst includes 19 tracks in which the late Jānis Grodums sang the vocal solo.

Andris Straumanis is a special correspondent for and a co-founder of Latvians Online. From 2000–2012 he was editor of the website.