Economic performance of the last year show that the growth of Latvia’s GDP in foreign direct investment is not necessary. Foreign investors can evacuate their capital of Latvia, and the rapid growth of the country’s GDP it can not affect.
If we estimate the accumulated foreign direct investment, according to a generalized Bank of Latvia statistics, in 2016, they decreased by 24 million euros. The reduction of foreign direct investments in economy of Latvia is affected positively unimaginable. According to estimates of the Central statistical office, in 2016 GDP (not aligned to the corresponding period last year, seasonally and calendar adjusted) rose as much as 2%. This gave grounds for hope that in case of reduction of the accumulated direct foreign investments of 48 million euros we may be, will achieve GDP growth of 4%.
This is the GDP of Latvia. The size of the non-financial investment in 2015 at current prices was measured at 11.4% in relation to GDP, while in 2016 this figure dropped to a mere 8.5% of GDP. But Latvia’s GDP is like water to a duck. More foreigners evacuated their capital, rather than invested into the economy of Latvia, but Latvia’s GDP is not affected! GDP grew, is growing and will grow even faster!
It should be noted that in the recent history of Latvia was the year when foreign direct investment left the Latvian land even faster than in 2016. It’s infamous in 2009, when accumulated foreign direct investment fell by 54 million euros. Then Latvia’s GDP behaved very badly, and its decline in comparative prices during the year was 14.3%.
But while methods of calculating GDP were not so sophisticated as nowadays. Now Latvia is a world leader in innovation in the calculation of GDP. We have created a GDP that is growing without investment, without the entry of foreign capital, etc. the Establishment of such a GDP, of course, will be the main contribution of Latvia in the history of the world in the development of the theory of Economics.
However, do not be too strict. The result when instead of the expected 5% and officially forecasted by the Ministry of Finance 3% of GDP grew by only 2%, means that the Latvian economy last year was not easy. His plan failed, and this is a tough time for the Latvian economy. The period of difficulties for each family, as well as the moment of truth for the state. Only in difficult time you can understand who’s real. The other, which requires to immediately return to invest in the moment when you’re financially very hard, is not a friend. This snake, which makes your difficult time even harder.
In 2016, Latvia had to hard. From the transit industry and construction were big minuses, EU funds were late night tram. Those who in such times withdrew their capital from the Latvian economy, are not our friends. It’s the villains who, when Latvian land was in the abyss, leg push us even deeper into the swamp.
It is expected that our friends are NATO partners, overcome by a sense of solidarity, rich countries of the EU, business leaders are required to help Latvia to overcome the shocks caused by geopolitical difficulties.
Open aggregated by the Bank of Latvia at the statistics and see which States in 2016 most have reduced their balance of accumulated direct foreign investments in Latvia. Who was the first left Latvia in 2016 in times of difficulties?
For 2016 Sweden were taken from the Latvian capital of more than half a billion euros. The Netherlands has expelled 60 million euros, and Britain is 44 million. Even Norway has withdrawn from the economy of Latvia and transferred to other countries, 34 million euros of its foreign direct investment.
Here are these strongest of NATO and the EU! When it is necessary to consider profit — full of friends, when GDP does not want to grow faster, capital will immediately take out.
Who, then, saved the economy of Latvia? Who was the biggest foreign investor in Latvia in the last two years?
In 2015, the largest identified foreign direct investors were Cyprus (plus 250 million euros), Estonia (+150 million Euro) and Russia (plus € 100 million). In turn, in 2016 the largest foreign direct investors were Luxembourg (plus 188 million euros), Lithuania (plus 159 million euros) and the same as Russia (another 142 million euros).
Given the fact that under the flag of Cyprus to Latvia includes the investment Uralchem Freight Limited, and under the flag of Luxembourg has invested Uralvagonzavod, I regret to have to accept that we should be grateful to Cyprus and Luxembourg only for the fact that associated with Russia, the capital of Latvia went under the addresses of these countries.
In difficult time we can only rely on neighbors — Lithuania, Estonia and Russia, and the vaunted European solidarity is more like hanging noodles on the ears of the uneducated Nations.