Deceleration of globalization
The middle class in the western countries is discontented with the stagnation of growth in financial standing and blames globalization for that: too much, they say, we help poor countries.
Indeed, the poorest population of the world and new market economies benefited from globalization the most. And they would be the first to suffer, if the West would decide to live ‘for itself’.
In case with Latvia the necessity to expedite completion of European projects is obvious. On the principle: take it or leave it. In particular this is about European funds in the construction of Rail Baltica. Moreover, it is desirable to get through exit of Great Britain from the EU with minimum losses, and, furthermore, to build up economic relations with alternative markets — China and Russia. In the latter case, however, policy interferes with economy.
The world gets older, meanwhile the market, which is tied up with those who are over seventy, grows. They need nor merely goods and services, which value grows over years. They need the labour market, where knowledge and skills of elderly people would be in demand.
A so-called ‘grey economy’ should be considered not as a burden for the state, but as new opportunities for the economic development.
This is particularly topical for a rapidly aging Latvia. The aforesaid requires contribution in education, specifically in the field of modern technologies, more flexible working conditions (including time and place of work), and adequate payment.
Business is about to change the rules of game
The technological changes entail almost historical changes in industry. The digital economy and economy of division ‒ “Uber”, “Airbnb”, other similar services ‒ just the beginning of changes, which we can expect in the future.
Currently new rules of game are still being developed. Therefore, the businessmen and politicians need to follow carefully and foresee changes.
Last chance for reforms
The debt burden poses persistent headache for the governments of developed countries. In Europe such burden on the average reaches 86% of GDP, thereby here, in substance, prosperity is built up ‘in debt’, which is not a durable solution.
Furthermore, meanwhile it is hard to forecast the long-term side effects of the unconventional monetary policy which is being implemented by the leading global central banks.
All together, on one side, make future economic shocks inevitable, but on the other side — alert today, alive tomorrow. There is yet time to get prepared and undertake necessary reforms.
There is yet time to make the business environment in Latvia more attractive for investments, by improving predictability of the taxation policy, legal regulation and quality of education.