Kariņš: Tightening the Budget Too Hard Could Stifle Latvia's Economic Growth
Former prime minister and New Unity party leader Krišjānis Kariņš says that when a government "tightens the belt" during a period of growth, it can cause problems. He pointed to investment figures and expected GDP growth.
Krišjānis Kariņš, a former prime minister of Latvia and the leader of the party New Unity (JV), has warned that a government "tightening its belt" while the economy is growing can create problems. He made the remarks on the TV3 podcast "Piķis un ģēvelis!", as reported by the newspaper Latvijas Avīze on 8 November 2026.
Growth figures
Kariņš said that, for the first time in Latvia, foreign direct investment unrelated to European Union (EU) funds has reached one billion euros. He also said that gross domestic product (GDP) growth in the country this year could be around 2.5%.
The politician stressed that this is growth. In his view, if the government begins to tighten the belt too much, that growth will be smothered. According to Kariņš, this would mean less money and fewer taxpayers.
Defence spending
He also emphasised that Latvia must work with its European partners so that the EU defence spending exemption granted to Latvia, allowing up to 1.5% of GDP, is still in force in 2030.
Kariņš is currently a senior adviser on geopolitical issues at Kreab, an international strategic communications agency.
