RIGA, April 6 (Xinhua) -- Each month of the national emergency that has been declared in Latvia due to the COVID-19 pandemic, reduces the national economy by an estimated two to three percentage points, Bank of Latvia Governor Martins Kazaks said on public radio on Monday.
Although the central bank's latest forecast suggests that Latvia's GDP might shrink by 6.5 percent this year as a result of the coronavirus crisis, Kazaks did not rule out an even more severe contraction if the public health crisis persists and further restrictions on businesses and people's mobility are needed to contain the infection.
The head of the Latvian central bank indicated that the main unknown in the given situation is how long it will take to stop COVID-19 from spreading in Latvia and the wider world.
"Current data shows that each month reduces the economy by around two to three percentage points," Kazaks said, stressing that the level of uncertainty is very high and if the battle against the virus drags on, the Latvian economy might suffer even greater losses.
Kazaks said that so far the Latvian government has been making the right steps to mitigate the crisis' impacts on the economy and stressed that support measures must be swift, targeted and with a fixed term.
"Latvia can afford to borrow to support the economy. This is no time for budget consolidation," said the head of the central bank.
The national emergency is effective until April 14, and the government is now due to decide on its expansion.