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Latvia : one of the fastest growing economies in the world

to 10.1% in 2007, even a 14.1% annualised rate in December.
In March 2007 the government introduced measures to slow inflation by slowing domestic demand and price growth, such as stricter requirements for mortgage borrowers. Yet since prices
and wages are still significantly lower than Western Europe, and the borders are open to trade and migration, it is reasonable
to assume that price and wage convergence with the West should keep Latvian inflation well above core European levels for many years to come.
Unemployment dropped to 4.7% in 2007, far lower than Western
Europe, and is expected to decline below 4.5% in 2008, making labour a scare commodity. Latvia joined the Schengen area at the end of 2007, removing all borders and controls with the rest of Western Europe.
Home mortgage rates remain low, with euro denominated home loans ranging from 0.9-1.5% over libor (making 4.65-6.25% at the end of 2007). Mortgage lending growth slowed to less than 20% on an annualised basis by the end of 2007, but total bank lending still grew 47% in 2007 as banks shifted their focus to commercial lending.
FDI inflow in 2007 was €595 per capita, and will remain at this level for the years ahead due to the inflow of EU structural funds.
The national currency, the Latvian lat, remains pegged to the euro at the Central Bank rate of 0.702804 lats to the euro, meaning one lat is worth 1.42 euros. Latvia expects to keep the currency pegged at this level until Latvia joins the eurozone, sometime after 2012.