## Republic of Latvia: Selected Issues

_IMF Staff Country Reports, August 7, 2019_

## Source details

**Canonical URL:** [Republic of Latvia: Selected Issues](https://www.imf.org/en/publications/cr/issues/2019/08/06/republic-of-latvia-selected-issues-48567)

## Other formats

- [Markdown version](/en/publications/cr/issues/2019/08/06/republic-of-latvia-selected-issues-48567/index.md)
- [Structured JSON version](/en/publications/cr/issues/2019/08/06/republic-of-latvia-selected-issues-48567/index.json)
- [Bundle manifest](/en/publications/cr/issues/2019/08/06/republic-of-latvia-selected-issues-48567/bundle-manifest.json)

## Bibliographic details
- Published: August 7, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513510057.002

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### Analytical focus
- Analyses the implications of global value chains (GVC) participation for Latvia’s competitiveness and exposure to risks.
- Uses a structural model to:
  - Assess Latvia’s competitiveness through different real effective exchange rate (REER) measures.
  - Examine main factors behind differences in the REER measures.

### Key findings
- The paper estimates the impact of an appreciation of the GVC related REER measure on:
  - value added export growth — finding sizable effects.
  - real GDP growth — finding sizable effects.
- A rapid labor market tightening could lead to:
  - erosion in competitiveness.
  - reduction in growth.
- Trade tension induced tariff hikes:
  - may have significant cost for Latvia, especially in terms of value added produced in the country.
  - are likely to have moderate costs for Latvia in terms of value added produced in the country. (This phrasing and assessment appear in the source text.)

### Policy recommendations and mitigation options
- Strengthen competitiveness based on the REER and structural-model analysis.
- Policies aimed at:
  - enhancing product sophistication or quality.
  - export market diversification.
  - These measures could mitigate Latvia’s exposure to trade shocks in GVCs.

### Subjects and keywords (as stated in source)
- Subjects: Anti-money laundering and combating the financing of terrorism (AML/CFT), Banking, Crime, Currencies, Foreign exchange, Money, Production, Productivity, Real effective exchange rates, Total factor productivity
- Keywords: Anti-money laundering and combating the financing of terrorism (AML/CFT), Asia and Pacific, Baltics, CR, Currencies, Europe, firm, firm gain, Global, GVC participation, ISCR, micro firm, Productivity, Real effective exchange rates, REER index, Total factor productivity, VA REER appreciation, value-added REER, Western Europe, zombie firm

*Republic of Latvia: Selected Issues, IMF Staff Country Reports 2019, 265.*

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## Content in this bundle

- **Republic of Latvia: Selected Issues; IMF Country Report No. 19/265 July 23, 2019**
  - [Republic of Latvia: Selected Issues; IMF Country Report No. 19/265 July 23, 2019 (Markdown version)](/-/media/files/publications/cr/2019/1lvaea2019002.pdf.md){rel="alternate" type="text/markdown"}
  - [Republic of Latvia: Selected Issues; IMF Country Report No. 19/265 July 23, 2019 (PDF)](/-/media/files/publications/cr/2019/1lvaea2019002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2019/08/06/republic-of-latvia-selected-issues-48567_