BB.lv: Trading with Russia is like sitting on a powder keg,

“Why should we look for happiness where they promise us that they will finish us off? Let’s go look for happiness somewhere else. We export to Western markets, where the situation is much more predictable, the profit volumes are much higher in the long term. Therefore, from the Russian market we really we have to leave,” Kazaks said.

He also stressed that the best solution would be to stop trade with Russia for the entire region as a whole. “If the flows simply go around Latvia, then Russia still has support. At the moment, within the entire region, we must do the maximum to redirect our economy to other regions where growth is much stronger,” said the President of the Bank of Latvia.

Kazaks also compared trade with Russia to sitting on a powder keg.

“In this case, trading with Russia is like sitting on a powder keg and waiting for something to happen,” he said.

Kazaks noted that the Bank of Latvia’s calculations regarding how the cessation of cooperation with Russia would affect the Latvian economy were made at the start of the war, and, given that the volume of exports to Russia did not change significantly during this time, they are still valid, that is, if ties with Russia are severed, the hit to the Latvian economy will be regarding 2% of gross domestic product (GDP).

He added that this would mean, for example, no economic growth this year or a slight recession. “But there is nothing overwhelming regarding this. Yes, it hurts, but it is not a pain for the entire economy. If there is an increase in unemployment, it will be temporary and small, because the labor market is still quite strong. (…) This is more regarding individual companies, it’s a question of individual sectors,” Kazaks said.