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Latvian economy to slow by half

The European Union's fastest growing economy will continue to grow into 2008, but at only half the pace of 2007. This is likely due to the credit growth problems throughout the global economy as well as a fall in retail sales. This was issued by the International Monetary Fund, IMF.

The country's economy is likely to grow by 5.75 per cent, which is still high especially in comparison to the many waning economies surrounding it. Yet, over the last 11 quarters, Latvia has seen incredible growth of 10 per cent or more. The benefits here allowing this to happen include the ability to finance with cheap credit as well as rising wages.

Inflation in Latvia is high, with an 11 year high hitting 14.1 per cent for December. The IMF says that inflation here will be high, but lower than 2007 in the coming year. They estimate it to be 12.8 per cent for 2008.

One of the problems with the Latvia economy will be its property market going forward. As one of the EU's most affordable and most in demand, it is starting to contract. The property market here has been a focal point in the economy for some time. How much it will contract or for how long is anyone's guess, according to investors.

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