Karins: Overly Tight "Belt-Tightening" Could Stifle Latvia's Growth
Karins, senior adviser on geopolitics at the international agency Kreab, warns that excessively strict cuts to state spending could halt Latvia's economic growth. He cited foreign direct investment reaching one billion euros and projected GDP growth of around 2.5% this year.
Karins, senior adviser on geopolitics at the international strategic communications agency Kreab, has warned the Latvian government that excessively strict spending restraint, or "tightening the belt", could cause problems for the economy. In his view this matters because stifling growth would mean less money and fewer taxpayers.
Growth figures
Karins backed his position with economic data. He said that, for the first time in Latvia, direct foreign investment not linked to European Union (EU) funds had reached one billion euros. Gross domestic product (GDP) in the country, he said, could grow by around 2.5% this year.
Karins stressed that these figures represent growth. If the government begins to tighten the belt too hard, he argued, that growth would be smothered, and the result would be lower tax revenue.
Defence spending
Karins also emphasised that Latvia must work with its European partners so that the EU defence spending exemption granted to Latvia, of up to 1.5% of GDP, remains in force in 2030 as well.
