Latvia's austerity measures have boosted competitiveness and stabilised public finances in the country, an expert has said.
Frank Gill, an analyst at the financial market consultancy Standard & Poor, told Bloomberg that inflationary trends had been reversed and that wages are now markedly lower in both the public and private sectors.
Latvia was required to implement an austerity budget after the European Commission and International Monetary Fund agreed to a €7.5 billion loan package for the Baltic state in 2008.
Mr Gill said that wage levels had become very competitive, noting that public sector pay packages have fallen by 45 per cent on the year while private sector salaries have fallen between five per cent and 30 per cent during the last 18 months.
He pointed to the beginning of a recovery in exports, adding: "There are grounds for optimism here, given the scale of adjustment that has already occurred, and the successful passage of an ambitious 2010 budget. Latvia has taken measures that would be very difficult to implement in many Western European countries."
This week, a study by the Financial Times also found that Latvia is one of several central and eastern European markets in which improving public finances have led to a resurgence in investor interest.
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