LCCI: Latvia’s drop in the Global Com­pet­i­tive­ness Re­port is a bad sign for the world

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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.

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