LCCI: Latvia’s drop in the Global Competitiveness Report is a bad sign for the world
Latvia’s decline by five spots in the Global Competitiveness Report is a bad sign for the world and investors, says Latvian Chamber of Commerce and Industry President Aigars Rostovskis.
He adds that Latvia has not had any major breakthrough with competitiveness in the past five years. If anything, Latvia’s competitiveness currently stagnates. At the same time, other countries continue increasing their competitiveness.
«Unfortunately, we are behind developed countries in terms of objective competitiveness,» says Rostovskis, adding that Latvia’s drop by five spots in the Global Competitiveness Report is a bad sign for the world and investors, who actively follow such ratings. Rostovskis reminds that Latvia’s competitiveness in comparison with other countries is also negatively impacted by the population decline. The number of pensioners in Latvia also increases more rapidly than the number of people entering the labour market. This means economic growth will not continue in a long-term perspective. Supposed growth is only illusory.
«There is an illusion of activity because external conditions for exports are sufficiently good and this means the economy does grow. This is further contributed by funding flowing in from European funds. This situation may remain for a couple of years, but the true situation is rather worrying,» says Rostovskis.
He adds that to prevent threats to competition, Latvia has to commence structural reforms and increase its competitiveness on a global scale. One possible solution would be reviewing the existing tax policy. «It is a complex matter that has to be addressed. We’re being pushed by inertia at the moment,» he says.
This Wednesday’s published World Economic Forum’s annual study shows that Latvia dropped to 54th place from its 49th place in the Global Competitiveness Report. Latvia remains behind Lithuania and Estonia competitiveness-wise.
Lithuania is on the 41st place and Estonia is on the 29th place in the report.