Saturday, March 11, 2006

Latvia Also Have 10.5% Growth

Just like neighboring Estonia , Latvia had 10.5% GDP growth in the fourth quarter of 2005.

Just like in Estonia, 10.5% growth is actually even more impressive if you look at per capita growth as Latvia's population shrank by more than 0.5%. By comparison, Japan had zero population growth, the EU had 0.4% and the USA 1%. 10.5% growth is in per capita terms thus equivalent to 11.5% growth in the EU and more than 12% growth in the USA.

The Latvian statistics authority don't issue spending categories, but the closest equivalent to government consumption among the production categories, "public administration and defence; compulsory social security" showed a mere 2.8% growth, indicating that the role of government is declining in Latvia, in sharp contrast to both Sweden and America.

Latvia and Estonia now shares the top spot for growth in the EU, with the third baltic country, Lithuania coming in third at 8.3% and Slovakia coming in fourth with 7.5%. Not coincidentally, these four countries are the four with the lowest level of government spending and all four have adopted relatively low flat taxes.

And workers are benefiting from this boom with real wages rising 9.7%, even as unemployment is declining rapidly (from 9.6% to 8.2%).


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