Will former savers start spending more?
This and other questions were discussed by the renowned economics expert, Andris Strazds, and members of the American Chamber of Commerce in Latvia (AmCham) during its November Business After Hours event. The event was kindly hosted by Nordea Bank at its new office building.
Andris Strazds, Chief Economist of Nordea Bank, gave a presentation on so called spender and saver countries. He stressed that for the economy to start growing again, external demand must increase. According to Mr. Strazds, much depends on whether former “saver” countries – that have been earning more than they spend, including such countries as Germany, Sweden, the Netherlands and China – will start to spend their savings. He said that Latvia should not rely on its largest export partners – Estonia and Lithuania – as they are former “spender” countries that, like Latvia, were spending more than they earned and now they too have significantly cut their spending.
“In the broader Baltic region there are more “saver” than “spender” countries and it gives me some hope that exports [from Latvia] can revive relatively quickly provided that there are some policies in these ‘saver’ countries which facilitate spending”, said Mr. Strazds.
Following the presentation by Mr. Strazds, AmCham members discussed various issues, from upcoming changes in tax legislation to uncertainty in the financial markets. Mr. Strazds emphasized that he envisions greater certainty after the budget of 2010 is passed by the Parliament, in particular if it is acceptable to the international lenders. “Then we will be able to say that the worst in the financial markets is over and we can expect pressure and speculation regarding the pegged exchange rate to recede”, he added.
The presentation was followed by an extended Q&A session, networking and a tour of Nordea Bank’s new office building.
