RIGA, March 24 (Xinhua) -- With COVID-19 continuing to spread across the globe, the Latvian economy is likely to contract this year, but this will be a single-digit reduction, Bank of Latvia Governor Martins Kazaks said in an interview with public radio Tuesday.
Kazaks described the current developments in the world as an "unprecedented" global crisis, but noted that the Latvian economy is now much stronger and more resilient to shocks than during the financial crisis of 2008.
"The spread of the virus is fast. We are not in the epicenter, but the impact will be negative. This year, the economy will be in the negative territory, there will be a recession," Kazaks said, adding that the most realistic scenario for the Latvian economy is a single-digit recession with a hope that a recovery will follow in the second half of 2020.
"If growth does not resume in the second half of the year, the slump will be bigger," Kazaks said. "Economically, we are much more resilient now. Back then (in 2008) we had huge problems with debts. Now we are fairly good prepared for various turns. Today's crisis is not requiring a consolidation of budget expenditures. This time, we can afford to spend," he said.
He predicted that the effects of the crisis will be felt in all sectors of the economy. "Economic activity will slow down in many areas. In others it will come to standstill for a while. Those with smaller income will suffer more," Kazaks said.