It’s a pair of yet again bad news for the Baltic state Latvia after it was downgraded by Standard & Poor’s a notch into junk bond status in light of still weak finances, deteriorating income and political challenges. On the same day, the country also revealed its GDP fell 19.6% y/y, worse than the 18% it reported for the first quarter.
The data were better than the average 22 per cent contraction forecast by economists and Latvia’s prime minister insisted the worst had passed. “In the next quarters the situation will become more positive though a number of serious economic problems will remain,” Valdis Dombrovskis said.
Even if the bottom has been reached, the effects of the deteriorating economy to other countries who have exposure in Latvia and the other Baltic states such as Sweden cannot relax just yet. More is to come.
The report here.