Page last updated at 08:58 GMT, Thursday, 11 June 2009 09:58 UK

Latvians see hope amid the gloom

By Mark Sanders
BBC News, Riga

Liga Stala
Liga Stala says people will adapt to the new situation

"This is my crisis baby," jokes Liga Stala as she rubs her bump, "Matthias was my inflation baby and Renats was my economising baby."

Liga's three children are the most charming set of economic indicators you'd ever wish to meet. The growth of her family tracks the Latvian economy's roller-coaster ride in recent years.

We talk about the future in her small house on the outskirts of Riga.

Liga, who's seven months pregnant, is optimistic despite the family getting the grimmest of news at the start of the year.

Her husband, Ivars, was told he'd lose his job and in Latvia there's plenty of competition when trying to find work. The unemployment rate is 17.4%.

"It was a huge shock for us in the beginning because we didn't really expect anything like that," she says.

"We're fighting with the current situation which this country is going through and trying to survive.

"But we have all that we need. We have food, we have drink and we have a roof above our heads.

"The crisis will not go on forever and people will adapt to the new situation. It's more difficult psychologically than financially at the moment."

Rise and fall

Liga is counting her blessings while others are counting the cost of Latvia's financial crisis.

Riga skyline
Latvia is experiencing one of the sharpest recessions in Europe

For the last few years this small Baltic state has had an Icarus economy, flying too high and too fast.

The country had dizzying double-digit growth from 2004 through 2007 as the property market soared, fuelled by easy foreign credit.

But then it crashed. Latvia is now arguably experiencing the worst recession in Europe, with its economy shrinking by 18.6% year-on-year in the first three months of 2009.

Girts Rungainis, an investment banker, feels that the property market overheated because many people who'd lived under Communism were economically illiterate.

"What people didn't understand, or listen to at the time, is that it's not sustainable," he says.

He says Latvians thought they'd found a shortcut to prosperity, "and it turned out there are no short cuts to prosperity".

"You have to do it the ordinary hard way, you have to work to reach something and I think that's a very important lesson," he says.

Missed opportunity

Girts Rungainis
I think time has been wasted in terms of the elite not understanding that we have to create a real plan and an idea for the long-term
Girts Rungainis

Girts studied physics and mathematics at university but realised such topics, as he puts it, "wouldn't feed the family".

He did two years in the Soviet Army and on his return to his studies he switched to economics and planned a career in finance.

The current financial meltdown is the fourth crisis he's witnessed in his country.

First there was the break from the Soviet Union in 1991, then Latvia suffered a banking collapse in 1995, and that was followed by the Russian financial crisis of 1998 which pulled Latvia down into recession.

Girts Rungainis feels that his homeland has made great strides since independence but, in economic terms, he believes it has wasted the last two decades.

"We joined the EU and NATO and, in terms of freedom and liberation, we have made tremendous achievements," he says.

"But I think time has been wasted in terms of the elite not understanding that we have to create a real plan and an idea for the long-term.

"We should have done more and now we're in this crisis we can see that, and we will pay for that dearly."


Zane Perkone
There is always hope
Zane Perkone

Walking past Riga's many elegant Art Nouveau buildings, it is a little easy to forget the current crisis.

This is a beautiful city, often described as the Paris of the north. And the people have a strong sense of resilience. They feel that no matter how bad things become they will, somehow, get through them.

Zane Perkone is part of the generation facing a future full of uncertainty.

When I ask her what she's doing at the moment she says, "I work". Then there's a pause and the broadest of grins appears, "Yeah, I work!" She's surprised by her own statement.

Nearly one in three young people in Latvia are unemployed.

"It was very difficult to find a job," she tells me, "but I found one. I can't say that I'm satisfied with my work as I sit at a computer and enter data."

As for how people are managing to cope financially she says, "I think there'll be problems in the autumn because now a lot of people have their savings and I think in a few months time their savings will have ended."

Is there much hope, I ask? That broad grin appears again, "There is always hope."

Print Sponsor

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Sign in

BBC navigation

Copyright © 2019 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific