Baltic states have awakened to a nightmare

[Joanne98]

The three EU Baltic states of Estonia, Latvia and Lithuania were, until recently, racing economic "tigers": now they have awakened to a nightmare.

Experts are forecasting that their economies could shrink by 10% in 2009, writes LETA.

Activity began to slow sharply at the beginning of last year and then went into meltdown as global growth was brought to a shuddering halt by the financial and banking crisis.

Now the tigers are on their knees, or nearly.

Latvia leads the economic retreat, with Estonia and Lithuania not far behind as activity, once fuelled by robust demand and easy credit, is torpedoed by the credit crunch.

Latvia showed the fastest economic growth in the European Union in 2006, expanding its gross domestic product by 12.2%.

But in December last year it had to seek a bailout of 7.5 billion euros (9.6 billion dollars) from the International Monetary Fund and other lenders after the government nationalised its second-biggest bank, Parex.

Commercial banks such as SEB and Swedbank of Sweden now forecast that the economy will contract, or go into reverse, by seven to 10% this year. The Latvian central bank agrees.

The economy could even contract by 15%, SEB bank chief economist Andris Vilks told AFP.

http://www.baltic-course.com/eng/analytics/?doc=9989

[dipsydoodle]

1. Good times, bad times

It would really be interesting to get some input here from anyone with direct knowledege of comparisons between when they were Russian satellites , when that ceased and when they joined the EU.