Published on : Thursday, October 29, 2020
In Latvia, the Ministry of Economic Affairs (EM) has prepared a plan with additional support measures for the tourism sector, which has been affected by the COVID-19 crisis, said EM State Secretary Edmunds Valantis.
Valantis said that the impact of the COVID-19 crisis on the economy is greater in the fall than it was at the beginning of the COVID-19 pandemic in spring. Hence, the EM has devised a plan with additional support measures for the tourism sector.
Valantis said that the hotel sector in Riga, which is dependent on the influx of foreign tourists, has been hit hardest. It is especially important for this segment to stay alive this season until the next summer. Some hotels are closed, while others continue to operate.
Similarly, one of the options for assisting businesses in general is to recompense employee downtime from day one, said the EM Foreign Minister.
The President of the Bank of Latvia, Mārtiņš Kazāks, stressed the importance of assisting companies during this time. The state has funds to sustain it and the national debt is relatively low; however, the country needs to invest money wisely with determination. The state should not bail out companies that are actually dead, especially, those with no prospect of a recovery in the coming year.
Kazāks added that this concerns tourism, hospitality, entertainment and dining.
Workers in these sectors and companies in difficulty should be supported in retraining so that they can move to other sectors. If this is not the case, there is an additional risk of poverty and inequality, said Kazāks.
As per the latest forecast by the Bank of Latvia, the decline in gross domestic product (GDP) will be 4.7% this year, instead of the 7.5% previously estimated, while GDP growth of 5.1% is expected in 2021, which is 6.7% lower than previously planned.
Kazāks said that the forecast was made in August before the COVID-19 outbreak in the fall. GDP is expected to decline more sharply than previously estimated at less than 5%.
As per current estimates, GDP decline in Latvia could decrease by 7% this year, but the impact could be greater next year.