Latvia: recession will have cost 37 pct of economy

Latvia's central bank said Wednesday that its economy will have lost over a third of its value over the past two years due to the recession. The Bank of Latvia wrote in its macroeconomics report that compared with the fourth quarter of 2007, when Latvia's four-year boom peaked, gross domestic product would fall 37 percent.

The size of Latvia's economy will return to the level of 2004 -- the year it joined the European Union. For four years after membership, Latvia boasted the hottest economy in the EU, only to see it enter a freefall in the beginning of 2008 -- as the global financial crisis began.

In December 2008 the government was forced to turn to international lenders such as the International Monetary Fund and the EU for a euro7.5 billion ($11 billion) bailout loan to stave off bankruptcy. Latvia's economy is expected to shrink by about 18 percent this year and another 4 percent in 2010.

Meanwhile, the ranks of the jobless continue to swell. On Tuesday, Eurostat, the EU's statistics agency, reported that unemployment in Latvia in October was 20.7 percent, the highest in the 27-member bloc.