Recession-plagued Latvia to hit bottom this winter: minister

(RIGA) - Suffering the deepest recession in the entire European Union, Latvia will hit bottom this winter, the Baltic nation's Economy Minister Arits Kampars said Friday.

"The lowest point probably will be in the winter," he said in an interview to the Latvian Independent Television.

He was quick to point out that lower utility prices would take effect then, easing the burden for beleaguered Latvians, many of whom have suffered significant salary and pension cuts as part of the government's austerity drive.

"Heating prices would be lower by 20 percent and that is a good news," he added.

While this year's forecasts suggest Latvia's economy will contract by 18 percent, Kampars said Friday he expected to see GDP shrink by 4.0 percent "at the most" next year.

"Next year, we will reach a level from which we can go up," he said.

Latvia adopted a series of painful budget cuts this week aimed at unlocking the next tranche of a 7.5-billion-euro (10.1-billion-dollar) loan from the European Union and the International Monetary Fund needed to bridge the gap in this year's budget and so avert bankruptcy.

A country of 2.3 million people that broke free from the crumbling Soviet bloc in 1991, Latvia enjoyed robust economic growth in recent years after joining the EU in 2004.

But its overheated economy went off the rails last year as rampant inflation and a bursting credit bubble were compounded when the global economic crisis hit its major trading partners in Western Europe and Russia.