The Latvian government has become the second European administration to fall as a result of the global economic crisis, following the collapse of Iceland's government last month. Latvia's prime minister resigned today and the government folded as a result of the country's economic crisis, one of the worst in Europe.
Latvia is not in good shape, to say the least. With the country in severe recession, the economy is expected to contract by up to 12 percent in 2009, and unemployment is set to rise by 50 percent. GDP in the final quarter of 2008 fell by 10.5 percent compared to the previous year, and economists are predicting a further drop of 10 percent for this year.
The resignation follows last month's massive protests in Riga, the country's capital, which saw 40 people injured and 100 people arrested.
Latvia's situation is not isolated. The story throughout Eastern Europe is much the same. After years of boom following the east's entry into the EU, economies across the East have come to a crashing halt. Across Europe the countries that have experienced a boom in the past decade are now suffering the worst. The UK, for instance, is suffering severely while in France the effects have been less dramatic because the economy there had been performing poorly for some time before the crisis hit.
The plummeting fortunes of Eastern Europe have sparked fears that a "spring of discontent" is around the corner, a period that will see increasing violence in the young countries of the East and the collapse of several governments. Bulgaria, Romania and the Baltic states have all been hit particularly hard by the crisis. Sofia, Bulgaria has seen recent violence in which 150 people were arrested. I'll be travelling to Sofia next week to work on a story about vote buying and participate in a panel discussion organized by CafeBabel about the parliament elections. While I'm there, I'm also going to see what I can find out about the economic situation and whether the government is concerned about more dramatic protests in the near future. It will be an interesting time to be in the new EU state.