Tag Archive for Latvia

Baltic Region Outlook (BRO) – Estonia

Baltic Region Outlook (BRO) – a weekly economic bulletin in English language.  In this week’s Baltic Region Outlook (BRO)  edition – Estonia

Main news topics:

  • Bad weather in Spain pushes up vegetable prices
  • Lithuania plans to introduce minimum needs basket
  • New alternative fuel vehicle registrations in 2016

BRO: Economic Insights

22 out of 28 EU Member States have national minimum wages. Only 6 countries do not have national minimum wages: Austria, Cyprus, Denmark, Finland, Italy, Sweden.

It appears, as if there were three blocks of countries: with minimum wage up to 500, between 500 and 1000 and over 1000 euro. All three Baltic states are in the first group, with the minimum wage up to 500 euro monthly. The gap between the highest and lowest minimum wage payed is between Luxembourg (1998.59) and Bulgaria (235.2) and the ratio is 8.5:1.

If the price differences are taken into account, and minimum wages are expressed in purchasing power standard (PPS), minimum wages in countries with relatively lower prices become relatively higher, whereas minimum wages in countries with relatively higher prices become relatively lower, as the figure 2 shows.

Once the minimum wage is expressed in PPS, the difference between the highest and lowest paid minimum wage shrinks to ratio of 3.3:1

As for policy-making the minimum wage and median wage ratio is of importance, as the economists suggest not to set the national minimum wage higher than 50\% of median wage. Higher minimum wage could damper the demand for labour and thus decrease the economic growth. Unfortunately, Eurostat provides the median data only for the year 2014.

Note: Eurostat data of minimum wages does represent only the gross monthly minimum wages and the true cost of labour may be different due to different additional taxation (e.g. social contributions, income tax paid by employer etc.)

 

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Baltic Region Outlook (BRO) – Latvia

Baltic Region Outlook (BRO) – a weekly economic bulletin in English language.  In this week’s Baltic Region Outlook (BRO)  edition – Latvia.

Main news topics:

  • Euro area GDP +1.7% in 2016, +1.8 in Q4 y-o-y
  • Russian GDP -0.2 in 2016, Polish GDP +2.8 in 2016
  • 21.8% of Latvia’s population at risk of poverty in 2015

BRO: Economic Insights

The Phillips curve links price or wage growth to a measure of economic slack, such as the output gap and provides a framework for analyzing
and forecasting inflation developments.

Phillips curves for Euro area (19), Estonia, Latvia and Lithuania are estimated using the simple linear regression.

The simple framework model explains about 18-20 percent of variation in inflation. The coefficients associated with the gaps, or the “slopes” of the Phillips curve, are significant and their signs are as expected – wider negative gaps are  typically accompanied by lower inflation rates. According to the $R^2$ coefficient, the output and unemployment gap can explain around 18-20\% variation in inflation in this simple framework. The intercepts depict the expected average core inflation rate given a 0-gap from potential GDP. In this scenario, annual core inflation rate in Estonia is estimated at 2.6\%, in Latvia 3.3\% and in Lithuania 2.3\%

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Data: BRO_005_Latvia_2017_02_05

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Baltic Region Outlook (BRO) – Lithuania

Baltic Region Outlook (BRO) – a weekly economic bulletin in English language.  In this week’s Baltic Region Outlook (BRO)  edition – Lithuania.

Main news topics:

  • US Q4 GDP +1.9, UK Q4 GDP +0.6
  • U.S. President pulls out of TPP
  • Brexit needs parliament’s approval
  • Heating up housing market in Lithuania

BRO: Economic Insights

Transparency International released its yearly Corruption Perceptions Index (CPI). Estonia scored highest with CPI of 70 and ranked 22nd , Lithuania scored 59 points and ranked
38th , while Latvia achieved only 57 points and ranked 44th . Poland reached 62 points and ranked 29th. I used a simple linear regression to estimates the results of one CPI point gain on GDP/capita in PPP. The estimated model suggests, that 1 point increase in CPI increases the GDP/capita in PPP by 4.6 %.

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Data: BRO_004_Lithuania_2017_01_30_CPI_GDP

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Baltic Region Outlook (BRO) – Estonia

Baltic Region Outlook (BRO) – a weekly economic bulletin in English language.  In this week’s Baltic Region Outlook (BRO)  edition – Estonia.

Main news topics:

  • Britain chooses “hard” BREXIT
  • Lithuania ahead of Baltic neighbors on Bloomberg Innovation Index
  • Lithuania and Latvia exports decline in Jan-Nov 2017

In the third part of BRO: a brief analysis of the main contributors to annual average inflation in 2016.

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Baltic Region Outlook (BRO) – Latvia

Baltic Region Outlook (BRO) – a weekly economic bulletin in English language. BRO is to come out on every Monday. In this week’s Baltic Region Outlook (BRO)  edition – Latvia.

Main news topics:

  • Euro area industrial production up by 1.5 % in November 2016
  • British government considers GBP 1,000 levy for EU guest workers after BREXIT
  • Baltic States: new light-vehicle registrations +14 % in 2016
  • Latvian Finance Ministry for greater tax progressivity

In the third part of BRO: GBP to EUR exchange rate and possible influence in Baltic states trade with the UK patterns.

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Baltic Region Outlook (BRO) – Lithuania

Starting with the year 2017 Lithuanian-Economy.net begins to publish Baltic Region Outlook (BRO) – a weekly economic bulletin in English language. BRO is to come out on every Monday and  will consist of three parts:

  1. Key economic indicators  for either Lithuania, Latvia or Estonia
  2. Economic news from Baltic states, euro area and the world
  3. Economic insight – a section with a brief economic analysis of a contemporary economic topic

The list of economic indicators in not yet final and may adjust during next couple of months. Probably more finance data will be included in the future bulletins.  Economic news are collected from various sources covering economic news in the Baltics. In economic insight part, most contemporary topics are to be covered, starting with increasing inflation in euro area in Decmeber 2016, which together with other robust news on economic recovery in eurozone will fuel discussions on when ECB will start tapering its QE.

The general idea for such a bulletin comes from the time of my internship at DnB Nord bank in Vilnius in 2011.  But compared to the bulletin of DnB Nord,  BRO has more focus on the “Economic insight” part and does not cover Poland every four weeks.

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Download: BRO_001_Lithuania_2017_01_09