In the Newsroom

March 6, 2009
Latvians hold their breath with economy on the brink

Riga’s central market. Photo: Sally Garner

Rooftops in Riga’s old town section. Photo: Sally Garner

Worldfocus producer Sally Garner is in Riga, Latvia, reporting on the country’s floundering economy. She writes about how the financial crisis has impacted daily life in Latvia.

The headlines read: “Europe’s Sickest Country,” “Latvia’s Government Collapses,” “Europe’s Most Extreme, Dramatic Economy” — but walk around Riga, Latvia’s capital city, and you’ll see people heading to work, stores full of shoppers and banks open for business. It’s a recession. It’s Eastern Europe. And Latvians are holding their breath.

Unemployment is growing. The economy is now shrinking faster than in any other European country, but in the central market we found people choosing from the mountains of fruit and vegetables, checking out tables full of cookies and candy, buying bunches of flowers and even picking out sweaters and coats. They’re worried, but they say they remember harder times under Soviet rule.

This is a country proud of its 18 years of independence from the Soviet Union and willing to fight to save itself in the current economic crisis.

As we walked around Riga’s old town with its cobblestone streets and “pedestrian only” signs, we saw “for rent” signs — and while many people didn’t want to talk about the economy, most say they know someone who’s lost a job in just the last few months.

We’ve only been here two days, but we’ve heard bankers, small business owners, students and engineers all tell us that Latvia is in trouble. They just want us to know it’s trouble they share with the rest of the world, not theirs alone.

We’ll be back in Latvia next week. Tomorrow we head to neighboring Estonia, and later to Lithuania where we’ll see for ourselves what the headline “Once leaders, Baltic countries in deep slump” means in the countries that were dubbed the “Baltic Tigers” when money was flowing and times were good.

– Sally Garner

Watch for Worldfocus’ upcoming series exploring the Baltics in the coming weeks. 




I have been to Latvia many times during the last ten years and have formed my own impressions about its people. They may be free but most people are all dressed up and broke. Yes, there economy is in a fast down mode and I have witnessed negative socialism in action. Latvians and Russian ethnics need jobs, and not at 5 or 10 LATS a day but decent wages. Industrialization and the creation of jobs. Eliminate the confiscatory 21% Ad Valorum tax put on the people for purchasing goods and services. When taxes are reduced or mostly eliminated, government revenues always go up. Simply put, more people working, more tax revenue for the goverment budget. The average Latvian and Russian ethnic drink too much Vodka as depression among the people is rampant. Latvia is a very beautiful jewel basking in antiquity with a very rich and interesting history and culture. Latvia will get through this world economic crisis but thoughts for the future should be for creating more jobs, paramount for all of its residents. The Republican, capitalistic economy will be a key for their success. Sincerely, just plain Ron, an all American Boy.


I would like to oppose to the last commenter and say that I think Sally’s blog was great. Times are tough, esspesially in Latvia, but we dont have to loose our pride, it is true that times have been tougher before and it will take smart goverment and people of Latvia to change things, however we need to keep showing beauty of our country and invite more people to help the economy.I’m happy that Sally had some good experiances in my home country.


Latvija is going through hard times and there are some important and serious issues to discuss and reflect upon. This piece, however, is not engaging with any issue in a serious manner. It is rather unenlightening and useless as a contribution to any such deeper discussion and understanding that should be the first sign that we are trying to reflect on the current economic crisis so that we don’t condemn ourselves to repeating it. In these ‘hard times’ we need serious journalists with nuanced understanding of issues, contexts and histories of the countries they report from. Superficial statements about what is or is not being bought or sold at Riga’s Central Market might pass for an intriguing blog entry but they do not constitute good research or serious journalism. It is a pity to see that this is what passes for journalism these days.


I think you should have spent more time talking to the beggars on the walk from the train station to Old Town, they aren’t all fake you know! Or the car dealerships along the highway from the airport if you are going to Jurmala for tea with the bankers. Or quizzing the banks about the home/bizness foreclosures or the importing of foreign thugs to help beef up the repo bizness’s which are boooooming! Hell…almost anyone except a banker!


Today was rice day, fifty-pound sacks of white rice in trucks bearing an elephant logo. The same happy elephant appeared on the bags, its head raised to the sky, the trunk curved like an S.
“Elephant,” Todd said.
He said it because a laborer was staring at it intently. Which meant he wasn’t working.
“That’s right,” the man said. “I couldn’t remember the word.”
He was the only other human at the loading dock this morning. The man didn’t have a name, just a number, like the rest of the robots. Paris, at Night.


Today Saturday, granted it was one of the first sunny days so far this year. But the traffic was like 6PM rush hour. Slow bumper to bumper.

At the home improvement store, the parking lot was full, the cash registers with lines and people wheeling out cart after cart of ceramic tiles, and other fix it items.

At the larger supermarket almost not a place to park. Long lines at the deli and aisles so packed you could hardly get through. Long lines at checkout with lots of items on the belt. Same at a second supermarket we visited.

There is no real sign that we are facing a dire situation in a few months.

We are buying ONLY what is absolute necessary and holding off on many wish list items.

Cost of natural gas heating and hot water is US$400 for a 2 bedroom flat, family of three(3)

Percentage increases of items in the food and other stores is double or more higher than the inflation rate.

But yet people are spending like no care in the world.

I don’t understand it. No signs of a recession to me in greater Riga.



If you really want to see what’s happening with the Latvian economy I suggest you try visiting somewhere other than Riga’s Old Town, which exists in a bubble. I’m sure if you extrapolated the state of the US economy from what you saw and heard on Capitol Hill in Washington DC you would assume it was doing very nicely.


The economic situation may be affecting the lives of average citizens in Latvia, but what it is not yet affecting is the behaviour of the Latvian governments bureaucracy. The ministers at the top are playing a game of musical chairs. Each time a new prime minister plays the merry go round music the ministers run around in a circle and when the music stops they find their new ministry to pretend to lead.

The issue is that they never seem to lead the ministry policy to make process improvements. To make it worse, one department doesn’t appear to know what the other is doing and they don’t seem to care to find out. Money, precious budget money is being wasted on tasks and jobs that are not producing any benefit for the citizen. And for the business person it is wasting precious time running around town trying to perform tasks at various government offices to no avail.

For example, the VAT sales tax office called and said our Chairman needed to go to the local tax office where he lives and register. For eight years it was OK; but, now it wasn’t. Upon arriving at the tax office, one young lady sitting at a computer terminal with no queue said “not my job” and sent us to the lady with a 30 minute queue right next to her. This second lady’s sole job was to write your name in a green tax booklet and to enter the booklet number in the computer attached to the workers name. She added about six rubber stamps in the book for good measure. We asked the lady if this was all we needed and she said we need to take the booklet to the immigration office where they would add some check mark in the computer there.

Upon return to the office the accountant laughed and said oh, we don’t use these books any longer.

Now. the tax office lady said no, you don’t need to go to the immigration office you need to go back to the local tax office.

All this and now about eight hours of wasted time and we are still at an impasse. We need to be running our business not chewing up time and money on the public transport. Our effort to obtain new sales so we can pay new sales tax money is lost along the adventure.

This is just one of stories that are happening everyday to us and to others in Latvia.

No one cares and the situation will only get worse as the pressure on society increases.

The solution is for stronger leadership — strong leadership with a vision. Government needs to simplify their processes and eliminate these wasted steps.

In my almost nine years in Latvia now, I have not one experience where the process has been improved.

All the IMF bailout money given to Latvia has a good chance of simply being wasted on needless effort.

The Latvian government needs a “Shock” to wake them up and it appears they are going to get it. The question is will it help?


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