5% in 1998 and inflation to
range between 6% and 7%. In 1997 Latvia continued its strict fiscal
policy and apparently ended the year with a small fiscal surplus,
reflecting higher-than-expected income from customs revenues, excise
and business taxes, and restraints on government spending. Foreign
direct investment (FDI) in 1997 was a record $880 million by yearend.
Prospects for increasing FDI in 1998 are good if Latvia privatizes at
least some of its large companies, including Venspils Nafta (the state
oil company). Although Latvia was disappointed that it was not
included among the five Central and East European states invited to
start EU accession talks in spring 1998, it is likely to join the WTrO
in 1998. Latvia's growing current account and trade deficits remain a
cause for concern, reaching nearly 10% by yearend. Latvia's trade
deficit may even reach 22% of GDP in 1998.

GDP: purchasing power parity-$10.4 billion (1997 est.)

GDP-real growth rate: 6% (1997 est.)

GDP-per capita: purchasing power parity-$4,260 (1997 est.)

GDP-composition by sector:
agriculture: 9%
industry: 34%
services: 57% (1995)

Inflation rate-consumer price index: 7.4% (1997 est.)

Labor force:
total: 1.4 million (1997)
by occupation: industry 41%, agriculture and forestry 16%, services
43% (1990)

Unemployment rate: 7% (1996)

Budget:
revenues: $NA
expenditures: $NA, including capital expenditures of $NA

Industries: buses, vans, street and railroad cars, synthetic fibers,
agricultural machinery, fertilizers, washing machines, radios,
electronics, pharmaceuticals, processed foods, textiles; dependent on
imports for energy, raw materials, and intermediate products

Industrial production growth rate: 2% (1996 est.)

Electricity-capacity: 2.035 million kW (1995)

Electricity-production: 4.095 billion kWh (1995)

Electricity-consumption per capita: 2,300 kWh (1995)

Agriculture-products: grain, sugar beets, potatoes, vegetables; meat,
milk, eggs; fish

Exports:
total value: $1.4 billion (f.o.b., 1996)
commodities: wood and wood products, textiles, foodstuffs
partners: Russia, other CIS, Germany, Sweden, UK

Imports:
total value: $2.3 billion (c.i.f., 1996)
commodities: fuels, machinery and equipment, chemicals
partners: Russia, other CIS, Germany, Sweden, UK, Finland

Debt-external: $NA

Economic aid:
recipient: ODA, $122 million (1993)
note: commitments from the West and international institutions, $525
million