| Description |
1 online resource (35 pages) : color illustrations |
| Series |
IMF country report ; no. 16/172 |
|
IMF country report ; no. 16/172.
|
| Contents |
Post-crisis adjustment in Latvia: evedence from firm level data / Pragyan Deb -- Elusive credit growth in Latvia: causes and remedies / Maral Shamloo |
| Summary |
Latvia experienced a large macroeconomic adjustment in the aftermath of the crisis in 2007. The adjustment was characterized by internal devaluation via a combination of wage restraint and productivity gains. Shifts in sectoral composition or size distribution explain only a small portion of the observed productivity gains, which were driven mainly by "catch-up" of the relatively less productive firms. In addition, there were significant gains in "x-efficiency", whereby firms were able to maintain output with a smaller workforce. The internal devaluation did not benefit exportoriented firms differentially. Maintaining productivity growth in future will not be simple as easy gains have likely been exhausted and firms are approaching the domestic technology frontier Nevertheless, given the significant productivity gap relative to the EU15, there is scope for furtherimprovement. But closing this gap would require a strong push towards structural reforms. -- Latvia's creditless recovery has taken unusually long to turn compared to international experience. Although lack of credit has not undermined recovery so far, support from the financial sector will be crucial for its continuation going forward. This is particularly the case given the model for growth, which is based on investment-driven improvements in productivity. While demand factors explain subdued lending activity to larger, cash rich firms, supply factors are likely more important for SMEs and households. The crisis continues to cast a shadow, with banks cautious given past losses and bad experiences trying to recover collateral. Further, for smaller firms and households lack of collateral or documentable income is a major obstacle for access to credit. Firm implementation of the recent reforms to the courts and to insolvency procedures is vital. Although lessons learned from the crisis should guide bank business models and supervisory practices, it is important that excessive risk-aversion does not become embedded either. Further, in a foreign-dominated banking sector, the business cycle of the home country should not become an impediment to lending in the host country |
| Notes |
"June 2016." |
| Bibliography |
Includes bibliographical references |
| Notes |
Description based on online resource; title from pdf title page (IMF.org website, viewed July 27, 2016) |
| Subject |
Labor productivity -- Latvia
|
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Economic development -- Latvia
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Banks and banking -- Latvia
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Credit -- Latvia
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Banks and banking.
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Credit.
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Economic development.
|
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Labor productivity.
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Latvia.
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| Form |
Electronic book
|
| Author |
Deb, Pragyan, author.
|
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Shamloo, Maral, author.
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International Monetary Fund, publisher.
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| ISBN |
1475575661 |
|
9781475575668 |
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