(RIGA) - European Commission President Jose Manuel Barroso on Friday hailed robust growth in EU Baltic newcomer Latvia but urged it to tackle rampant inflation of nearly 16 percent to head off an economic crisis.

"You have to pay attention to how you deal with overheating," Barroso told reporters after meeting Latvian Prime Minister Ivars Godmanis.

"You have made huge progress, employment is rising faster than in any other EU country, yet the speed of this transformation has brought imbalances," he said.

"Growth on Latvia has been really impressive but we should be attentive to the problems of overheating ... because some fundamental balances are being affected," he said on the second and last day of a visit to Latvia.

In January, Latvia's 12-month inflation rate hit 15.8 percent, the highest figure since late 1996, with economic growth in 2007 put at 10.5 percent.

The economy ministry said Wednesday it expected inflation to peak in coming months at no more than 17 per cent and then to stabilise at 10-11 percent for the the remainder of 2008.

Some analysts however, have warned inflation could rise to 18 percent before dipping.

Analysts have been gloomy about the Baltic country's economic outlook for more than a year because of the cocktail of rocketing inflation and spiralling growth, the latter mostly driven by robust domestic demand.

In 2006, Latvia topped the EU table and outstripped the bloc's Western European members as it recorded growth of 11.9 percent, the fastest rate since independence.

Experts have repeatedly warned that the country needs a slowdown to avoid a "hard landing" for its economy.

Barroso said he was assured Friday by Latvian authorities that a "soft landing" was in store.

"Latvian authorities are aware of this challenge and are taking measures against inflation because it affects people. I'm sure this issue will be settled in a proper manner,"said Barroso.

The government last year introduced an anti-inflation plan which included tougher criteria for consumer lending but both the authorities and analysts have said the plan is unlikely to bear fruit until later this year.

A country of 2.3 million people, Latvia broke free from the crumbling Soviet Union in 1991 after five decades of rule by Moscow. It has enjoyed robust economic growth since the late 1990s and notably since joining the European Union in 2004.

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