The economy of the country, which was part of the socialist union

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It lags behind Lithuania and Estonia, but is ahead of Greece, Bulgaria, Russia, Serbia, etc. - about 150 countries in the world. Latvia was annexed by the Soviet Union in 1940. grew slowly, although Latvia (as well as Lithuania and Estonia) was in a better position compared to other countries that were part of the Soviet Union.


After the collapse of the Soviet Union in 1991-1992, Latvia malaysia mobile database experienced the same difficult economic situation as other post-Soviet countries. The economy shrank by about 30%, and inflation was over 1,000%. Despite the collapse of the Soviet Union, Latvia remained economically dependent on Russia, especially for trade. After gaining independence in 1990, the new Latvian government set itself the goal of completely dismantling the Soviet economic system and building a market economy.


However, the first years proved difficult. The transition to a market economy would have been impossible without the expansion of private ownership, so Latvia began a massive privatization process. State-owned banks were abolished, leaving only private banks. In 1993, Latvia introduced its own currency, the lats, into circulation. The exchange rate was fixed to the US dollar, which helped reduce inflation. Annual inflation, which had been over 1,000%, decreased to 35% in 1993, was already 2% in 1998, and did not reach double digits again until 2007.