The Global Economic Crisis' Second Casualty

The Global Economic Crisis' Second Casualty


Latvia's government collapsed
following weeks of financial instability. The New York Times explains some of the events leading up the resignation of Prime Minister Ivars Godmanis:

[T]he country’s export-driven economy, which burned red-hot when easy credit flooded the world banking system, has ground to a halt. Unemployment has rocketed in Latvia, while those who have managed to hold on to their jobs are receiving significantly less pay. Public discontent, unsurprisingly, is rising, while trust in the government has plummeted. Violence broke out in January after about 10,000 people gathered for a peaceful demonstration. Scores of protesters battled police officers and ransacked stores, and 40 people were injured.

Last month GDP shrank by 10.5 percent and is expected to shrink 12 percent by the end of 2009 — a number some analysts say is optimistic. Latvia is the first member country of the European Union whose government has fallen as a result of the economic crisis.

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