by Edward Hugh: Barcelonabr /br /br /Two weeks ago a href="http://fistfulofeuros.net/afoe/economics-country-briefings/are-the-imf-and-the-ecb-lining-up-against-the-eu-commission-over-latvia/"I drew attention to a revealing press conference given by IMF First Deputy Managing Director John Lipsky and European Central Bank governing council member Christian Noyer/a where it seemed a rather different posture was being taken on the Latvian question than that which is being transmitted from Brussels. Then a href="http://fistfulofeuros.net/afoe/the-european-union/is-the-latvia-intervention-team-assembling/"P O'Neill found a message on Twitter/a which suggested the topic of the Latvian budget had been unexpectedly added to the EcoFin agenda.br /br /Today a href="http://www.bloomberg.com/apps/news?pid=20601095amp;sid=aPlxlddcc8lI"Bloomberg report/a that Barclays Capital’s chief economist for emerging Europe Christian Keller thinks that the IMF's posture of continuing to withhold funds even after the approval of the spending cuts “signaled that the rift between the IMF and EU has widened” .br /br /Now I don't want to see connections were there are none, but it is a coincidence that Christian Keller works for ...

The IMF Senior Regional Representative For Central Europe and the Baltics, Christoph Rosenberg, recently a href="http://www.rgemonitor.com/euro-monitor/254975/why_the_imf_supports_the_latvian_currency_peg"took me to task on RGE Monitor about my Latvian devaluation proposal/a (as did a href="http://www.rgemonitor.com/economonitor-monitor/254905/devaluation_in_latvia_why_not"RGE's own Mary Stokes/a), and I would like now to take a closer look at some of the points they raise.br /br /In the first place, I would like to say that I obviously regard both Chrisoph and Mary as excellent economists, and I was in no way refering to them when I said that arguing in favour of sticking to the present currency peg constitutes trying to justify “virtually the unjustifiable” according to “the implicit consensus among thinking economists.” I do still hold that the consensus is with me, but that certainly does not mean I regard those who differ from me as "unthinking", and certainly hope I didn't give the impression that I was. And with that little ...

The IMF finally announced it's Latvia "bailout" plan on Friday. The plan involves lending about €1.7 billion ($2.4 billion) to Latvia to stabilise the currency and financial support while the government implements its economic adjustment plan. The loan, which will be in the form of a 27-month stand-by arrangement, is still subject to final approval by the IMF's Executive Board but is likely to be discussed before the end of this year under the Fund's fast-track emergency financing procedures, and it is not anticipated that there will be any last minute hitches (although I do imagine some eyebrow raising over the decision to support the continuation of the Lat peg). The Latvian government admits that some of the IMF economists involved in the negotiations advocated a devaluation of the lat as a way of ammeliorating the ...

Estonia's economy shrank again in the third quarter - by an annual 3.3 percent, thus clocking up the second-worst performance (after Latvia) in the 27 nation European Union, and offering us plenty of signs that the country's worst economic recession since 1994 is set to deepen. The contraction fulfils the basic technical criterion of recession since it follows a 1.1 percent fall in the second quarter according to data released by the statistics office yesterday (Thursday).With the global market crisis and credit crunch weighing on the world's leading economies, and especially with Germany - the eurozone's largest economy and principal economic powerhouse itself entering recession, the prospects for any export driven recovery have definitely now faded off into the distance. Estonia and Latvia now lead the Eastern European slowdown, following repeated warnings over the past year of about the risks ...

Estonia's economy shrank again in the third quarter - by an annual 3.3 percent, thus clocking up the second-worst performance (after Latvia) in the 27 nation European Union, and offering us plenty of signs that the country's worst economic recession since 1994 is set to deepen. The contraction fulfils the basic technical criterion of recession since it follows a 1.1 percent fall in the second quarter according to data released by the statistics office yesterday (Thursday).With the global market crisis and credit crunch weighing on the world's leading economies, and especially with Germany - the eurozone's largest economy and principal economic powerhouse itself entering recession, the prospects for any export driven recovery have definitely now faded off into the distance. Estonia and Latvia now lead the Eastern European slowdown, following repeated warnings over the past year of about the risks ...

Latvia's economy shrank an annual 4.2 percent in the third quarter, the fastest drop since at least 1994, according to today's flash estimate from the Riga-based statistics office (Friday). This follows a 0.1% year on year expansion in the second quarter.We do not have quarter on quarter statistics at this point, but if we apply the minus 4.2% calculation over last years Q3 2007 constant price number, then what we get is 2.147 billion Lati, and a GDP graph which looks like this:Which may have little analytic value (since the data is not seasonally corrected), but does enable us to form a pretty rough and ready visual impression of what is going on, where the annual contraction data remains rather abstract. The economy definitely peaked and started to enter contraction mode after the ...