8. Article

While the slowdown in the world economy may lead to a moderation of growth in Latvia in the short run, we expect that, over the medium term, strong growth will materialize in a low inflation environment. Our main macroeconomic objectives for 2002 and beyond are as follows: (i) real GDP growth at 41/2 percent in 2002 and 6 percent annually thereafter; (ii) inflation at about 3 percent per year; and (iii) containing the external current account deficit at about 7 percent of GDP in 2002, with a gradual improvement expected from 2003 onwards. We also anticipate a continuation of strong FDI flows so that at least two-thirds of the current account deficit will be financed through these flows, thereby keeping our external debt indicators at low levels. Fiscal Policies