Tag Archives: Latvia

MArio Draghi

Can Mario Draghi Celebrate Euro Victory Yet?

If there’s one man that can celebrate a fresh start in the new year, that certainly seems to be Mario Draghi.

The European Central Bank president had taken a bold stance during a London speech in July 2012 when he declared that he would do “whatever it takes” to save the Euro. Despite disbelief and opposition, even from within Euro-zone member states such as, most notably, Germany, Draghi seems to have proven himself good for his word.

The crisis that brought the purpose of the euro into questions and had many questioning its survival, appears to have been dissipated. Draghi has been praised even by some of his harshest critics, such as Nobel-laureate Paul Krugman and economist Nouriel Roubini for revitalizing the euro.

Krugman, in fact, admitted that “Draghi did the most of it,” and said it was “pretty clear that the ECB has been decisive in alleviating the European situation.”

So where can positive results be seen? Ireland put bonds for sale this week for the time after exiting the IMF’s support programme of three years. Portugal and maybe even Greece are expected to be able to follow suit soon enough. In Spain, moreover, yields on 10-year government debt fell the most since 2009. The Stoxx Euro 600 Index climbed to its highest peak in nearly five years, while the euro advanced the most against the dollar in nearly three years.

Reduced budget cuts and increased retail sales data this week seem to signal the beginning of the end for the longest recession in the short history of the euro. And just to prove wrong anyone who predicted that the euro would spit up now, Latvia joined the currency moving it from a 17- to an 18-nation shared currency.

Euro-colorful

Latvia Joins Euro But Latvians Are Not Thrilled

The euro has become an 18-nation shared currency in the first day of the year as Latvia joined euro area member states. But not all are excited about the news as half of Latvians, it seems, stand in opposition to the currency on fears of price hikes.

The citizens of the former Soviet republic suffered through the worst depression in 2008-2009 when the economy shrank by more than a fifth. In efforts to shore up the country’s finances and keep at pace with the Euro, Prime Minister Valdis Dombrovskis followed a bailout programme that mandate austerity measures equalling 16 percent of Latvian gross domestic product. In the third quarter of last year the nation’s economy exhibited the highest pace of growth in the EU at 4.5 percent.

Finance Mister Andris Vilks, who set the adoption of the euro as one of Latvia’s key goals announced on Wednesday: “Today is a very important day for Latvia, difficult to imagine three or four years ago. Everything is just beginning for Latvia.”

Latvia became the fourth former communist country in the euro after Slovakia, Slovenia, and Estonia, an effort the nation’s politicians kept at for over 20 years. Not everyone, however, agrees with the ruling powers. The move has double the opponents than it has supporters among a population of 2 million, according to opinion polls. Major fears of an increase in prices and new financial responsibilities for the country in the currency union make many Latvians pessimistic about future prospects.