In order to overcome the crisis caused by Covid-19 in Latvia, as well as to return as soon as possible not only to the pre-crisis level, but also to exceed it, the Minister of Economics Jānis Vitenbergs, together with businessmen, industry experts and organisations representing businesses, developed the Latvian economic recovery plan “Strategy for Latvia for Mitigation of the Consequences of the Crisis Caused by Covid-19”, which was approved by the Cabinet of Ministers today.
“Uncertainty about the impact of Covid-19 on economic development is extremely high, because it is unclear how long and widely the virus will continue to spread across Europe and globally. The Strategy for Latvia for Mitigation of the Consequences of the Crisis Caused by Covid-19 is a strategic framework with a package of measures to overcome the economic crisis caused by Covid-19 and its restriction measures, focusing not only on economic stabilisation but also on the use of growth opportunities created by the crisis,” emphasises the Minister of Economics Jānis Vitenbergs.
The short-term objective of the Strategy for Latvia for Mitigation of the Consequences of the Crisis Caused by Covid-19 is to achieve that the negative impact on the economy and business activities is as little as possible, while in the long term to achieve structural changes in the economy based on productivity growth in favour of the development of knowledge-intensive exports of goods and services. At the same time, it is important to reduce unemployment and the share of low-skilled workers, to develop and increase innovation and research capacity, to promote digitalisation solutions and access to financial instruments for entrepreneurs.
In conditions of the current challenges, it is primarily necessary to stabilise Latvia’s economy while maintaining the strategic course to accelerate the structural shift of the economy based on productivity. This can be achieved by adapting the economy to global trends in a timely manner and by creating new comparative advantages. At the same time, the economic stabilisation phase includes actions aimed at promoting export capacity and increasing productivity, as well as improving the business environment.
“In order to reduce the long-term decline in Latvia’s export capacity, and not only to return to pre-crisis level as soon as possible but also to exceed it, it is necessary to implement a timely export market competitor anticipation strategy – to support export capable industries with future growth potential, to re-focus adult education supply and to ensure access to finance for research and development and for the commercialisation and marketing of its results – products,” emphasises the Minister.
“At the same time, in order to minimise the decline in economic activity and employment related to the epidemiological situation, the state should also use domestic demand support instruments that would structurally strengthen the sustainability of the Latvian economy. National and local government procurement tools should be used to boost domestic economic activity. In addition, specific measures should be developed in the form of financial instruments, loans and capital instruments,” continues the Minister.
The strategy includes 5 action lines – human capital, innovation, business environment for export, availability of finances and infrastructure – with actions planned in three consecutive steps and over time periods respectively:
- economic stabilisation period – measures to be implemented in 2020 aimed at stabilising the financial situation for residents and businesses in conditions of the Covid-19 crisis and limiting the spread of the virus in Latvia;
- re-orientation period – measures to be implemented in 2021-2022 which, taking into account the changes in the global economy caused by the Covid-19 crisis and taking advantage of the benefits and challenges of the Latvian economy, create new opportunities for entrepreneurs and citizens, with an emphasis on innovation, digital transformation, lifelong learning and focusing on structural economic change by purposefully adapting state aid mechanisms;
- growth phase – from 2023 and onwards measures to transform the national economy based on the dynamic development of exports of goods and services, ensuring economic growth through productivity growth, automation, digital transformation, support for business growth and fast-growing industries and ecosystems.
The Strategy for Latvia will be complemented by specific action plans in each of the five action lines, defining specific measures, their deadlines and the responsible authorities, as well as the funding for their implementation.
You can read the Strategy for Latvia for Mitigation of the Consequences of the Crisis Caused by Covid-19 in detail on the website of the Cabinet of Ministers.